Question:
Find the amount to be paid if Karen borrowed a sum of $5950 at 8% simple interest for 7 years.
Correct Answer
$9282
Solution And Explanation
Solution
Given,
Principal (P) = $5950
Rate of Simple Interest (SI) = 8%
Time (t) = 7 years
Thus, Amount (A) = ?
The Rate of Interest is always calculated per annum, i.e. per year.
Thus, here 8% simple interest means, Rate of Simple Interest (SI) is 8% per annum.
Method (1) Using Formula
Calculation of Simple Interest
Formula to Calculate Simple Interest
Simple Interest (SI) = Principal × Rate × Time
Thus, Simple Interest (SI) = $5950 × 8% × 7
= $5950 ×8/100 × 7
= 5950 × 8 × 7/100
= 47600 × 7/100
= 333200/100
= $3332
Thus, Simple Interest = $3332
Calculation of Amount
The total money paid to the lender by a borrower is called the Amount.
In other words, sum of priciple and interest is called the Amount.
Formula to Calculate the Amount
Amount = Principal + Interest
Thus, Amount = $5950 + $3332
= $9282
Thus, Amount to be paid = $9282 Answer
Method (2)
Calculation of Amount when Principal, Rate of Simple Interest and Time are given
Calculation of Amount directly using Principal, SI, and Time
Formula to calculate the Amount
Amount (A) = Principal (P) + Principal(P) × Rate of Interest (SI) × Time (t)
⇒ A = P + PRT
Here in the question, P = $5950
Rate of Simple Interest (SI) or (R) = 8%
And, Time (t) = 7 years
Thus, Amount (A)
= $5950 + ($5950 × 8% × 7)
= $5950 + ($5950 ×8/100 × 7)
= $5950 + (5950 × 8 × 7/100)
= $5950 + (47600 × 7/100)
= $5950 + (333200/100)
= $5950 + $3332 = $9282
Thus, Amount (A) to be paid = $9282 Answer
Method (3) Unitary Method
Calculation of Amount using Unitary Method
Calculation of Interest using Unitary Method
Here, given Rate of Simple Interest = 8%
This, means, $8 per $100 per year
∵ For $100, the simple interest for 1 year = $8
∴ For $1, the simple interest for 1 year = 8/100
∴ For $5950, the simple interest in 1 year
= 8/100 × 5950
= 8 × 5950/100
= 47600/100 = $476
Thus, simple interest for 1 year = $476
Therefore, simple interest for 7 years
= Simple interest for 1 year × 7
= $476 × 7 = $3332
Thus, Simple Interest (SI) = $3332
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $5950 + $3332
= $9282
Thus, Amount to be paid = $9282 Answer
Similar Questions
(1) If Donald paid $5040 to settle his loan which he had taken 4 years before at a simple interest of 3%, then find the loan taken.
(2) What amount does Joseph have to pay after 5 years if he takes a loan of $3700 at 2% simple interest?
(3) Calculate the amount due if Charles borrowed a sum of $3900 at 10% simple interest for 4 years.
(4) Donald took a loan of $7000 at the rate of 6% simple interest per annum. If he paid an amount of $11200 to clear the loan, then find the time period of the loan.
(5) Joseph took a loan of $5400 at the rate of 8% simple interest per annum. If he paid an amount of $9720 to clear the loan, then find the time period of the loan.
(6) What amount does Joseph have to pay after 5 years if he takes a loan of $3700 at 6% simple interest?
(7) What amount will be due after 2 years if David borrowed a sum of $3200 at a 6% simple interest?
(8) Calculate the amount due after 9 years if John borrowed a sum of $5200 at a rate of 2% simple interest.
(9) Calculate the amount due after 10 years if John borrowed a sum of $5200 at a rate of 2% simple interest.
(10) Calculate the amount due after 10 years if Sarah borrowed a sum of $5850 at a rate of 4% simple interest.