Question:
Find the amount to be paid if James borrowed a sum of $5000 at 2% simple interest for 8 years.
Correct Answer
$5800
Solution And Explanation
Solution
Given,
Principal (P) = $5000
Rate of Simple Interest (SI) = 2%
Time (t) = 8 years
Thus, Amount (A) = ?
The Rate of Interest is always calculated per annum, i.e. per year.
Thus, here 2% simple interest means, Rate of Simple Interest (SI) is 2% 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) = $5000 × 2% × 8
= $5000 ×2/100 × 8
= 5000 × 2 × 8/100
= 10000 × 8/100
= 80000/100
= $800
Thus, Simple Interest = $800
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 = $5000 + $800
= $5800
Thus, Amount to be paid = $5800 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 = $5000
Rate of Simple Interest (SI) or (R) = 2%
And, Time (t) = 8 years
Thus, Amount (A)
= $5000 + ($5000 × 2% × 8)
= $5000 + ($5000 ×2/100 × 8)
= $5000 + (5000 × 2 × 8/100)
= $5000 + (10000 × 8/100)
= $5000 + (80000/100)
= $5000 + $800 = $5800
Thus, Amount (A) to be paid = $5800 Answer
Method (3) Unitary Method
Calculation of Amount using Unitary Method
Calculation of Interest using Unitary Method
Here, given Rate of Simple Interest = 2%
This, means, $2 per $100 per year
∵ For $100, the simple interest for 1 year = $2
∴ For $1, the simple interest for 1 year = 2/100
∴ For $5000, the simple interest in 1 year
= 2/100 × 5000
= 2 × 5000/100
= 10000/100 = $100
Thus, simple interest for 1 year = $100
Therefore, simple interest for 8 years
= Simple interest for 1 year × 8
= $100 × 8 = $800
Thus, Simple Interest (SI) = $800
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $5000 + $800
= $5800
Thus, Amount to be paid = $5800 Answer
Similar Questions
(1) Find the amount to be paid if Linda borrowed a sum of $5350 at 10% simple interest for 8 years.
(2) Calculate the amount due if Jennifer borrowed a sum of $3250 at 4% simple interest for 4 years.
(3) If Margaret paid $5046 to settle his loan which he had taken 4 years before at a simple interest of 4%, then find the loan taken.
(4) Margaret took a loan of $6700 at the rate of 7% simple interest per annum. If he paid an amount of $9983 to clear the loan, then find the time period of the loan.
(5) Calculate the amount due after 9 years if Sarah borrowed a sum of $5850 at a rate of 6% simple interest.
(6) Daniel took a loan of $6200 at the rate of 6% simple interest per annum. If he paid an amount of $9548 to clear the loan, then find the time period of the loan.
(7) Calculate the amount due after 9 years if Elizabeth borrowed a sum of $5450 at a rate of 10% simple interest.
(8) What amount does Linda have to pay after 6 years if he takes a loan of $3350 at 2% simple interest?
(9) Mary took a loan of $4100 at the rate of 6% simple interest per annum. If he paid an amount of $6068 to clear the loan, then find the time period of the loan.
(10) How much loan did Patricia borrow 5 years ago at a rate of simple interest 2% per annum, if he paid $5665 to clear it?