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) How much loan did Charles borrow 5 years ago at a rate of simple interest 5% per annum, if he paid $7375 to clear it?
(2) Robert took a loan of $4200 at the rate of 6% simple interest per annum. If he paid an amount of $6468 to clear the loan, then find the time period of the loan.
(3) Calculate the amount due after 9 years if David borrowed a sum of $5400 at a rate of 5% simple interest.
(4) John took a loan of $4400 at the rate of 8% simple interest per annum. If he paid an amount of $6864 to clear the loan, then find the time period of the loan.
(5) Calculate the amount due after 9 years if Thomas borrowed a sum of $5800 at a rate of 8% simple interest.
(6) Michael had to pay $3498 in order to furnish the loan taken 3 years before. If the rate of simple interest was 2% then find the sum borrowed.
(7) What amount does Karen have to pay after 5 years if he takes a loan of $3950 at 2% simple interest?
(8) In how much time a principal of $3050 will amount to $3416 at a simple interest of 4% per annum?
(9) What amount will be due after 2 years if Anthony borrowed a sum of $3650 at a 5% simple interest?
(10) What amount does Susan have to pay after 6 years if he takes a loan of $3650 at 4% simple interest?