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) Calculate the amount due after 9 years if Charles borrowed a sum of $5900 at a rate of 3% simple interest.
(2) James took a loan of $4000 at the rate of 7% simple interest per annum. If he paid an amount of $6240 to clear the loan, then find the time period of the loan.
(3) Calculate the amount due if Jennifer borrowed a sum of $3250 at 5% simple interest for 4 years.
(4) Calculate the amount due after 10 years if Susan borrowed a sum of $5650 at a rate of 3% simple interest.
(5) What amount does John have to pay after 5 years if he takes a loan of $3200 at 5% simple interest?
(6) Michael took a loan of $4600 at the rate of 10% simple interest per annum. If he paid an amount of $8740 to clear the loan, then find the time period of the loan.
(7) Calculate the amount due if Karen borrowed a sum of $3950 at 6% simple interest for 3 years.
(8) Calculate the amount due after 9 years if James borrowed a sum of $5000 at a rate of 4% simple interest.
(9) Anthony took a loan of $6600 at the rate of 9% simple interest per annum. If he paid an amount of $11352 to clear the loan, then find the time period of the loan.
(10) Anthony took a loan of $6600 at the rate of 9% simple interest per annum. If he paid an amount of $10758 to clear the loan, then find the time period of the loan.