Question:
Find the amount to be paid if Jennifer borrowed a sum of $5250 at 2% simple interest for 8 years.
Correct Answer
$6090
Solution And Explanation
Solution
Given,
Principal (P) = $5250
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) = $5250 × 2% × 8
= $5250 ×2/100 × 8
= 5250 × 2 × 8/100
= 10500 × 8/100
= 84000/100
= $840
Thus, Simple Interest = $840
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 = $5250 + $840
= $6090
Thus, Amount to be paid = $6090 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 = $5250
Rate of Simple Interest (SI) or (R) = 2%
And, Time (t) = 8 years
Thus, Amount (A)
= $5250 + ($5250 × 2% × 8)
= $5250 + ($5250 ×2/100 × 8)
= $5250 + (5250 × 2 × 8/100)
= $5250 + (10500 × 8/100)
= $5250 + (84000/100)
= $5250 + $840 = $6090
Thus, Amount (A) to be paid = $6090 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 $5250, the simple interest in 1 year
= 2/100 × 5250
= 2 × 5250/100
= 10500/100 = $105
Thus, simple interest for 1 year = $105
Therefore, simple interest for 8 years
= Simple interest for 1 year × 8
= $105 × 8 = $840
Thus, Simple Interest (SI) = $840
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $5250 + $840
= $6090
Thus, Amount to be paid = $6090 Answer
Similar Questions
(1) 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.
(2) What amount does Patricia have to pay after 5 years if he takes a loan of $3150 at 10% simple interest?
(3) Thomas took a loan of $5600 at the rate of 8% simple interest per annum. If he paid an amount of $10080 to clear the loan, then find the time period of the loan.
(4) How much loan did Dorothy borrow 5 years ago at a rate of simple interest 2% per annum, if he paid $7975 to clear it?
(5) What amount does Sarah have to pay after 5 years if he takes a loan of $3850 at 9% simple interest?
(6) Calculate the amount due if Karen borrowed a sum of $3950 at 4% simple interest for 3 years.
(7) Calculate the amount due if Patricia borrowed a sum of $3150 at 6% simple interest for 3 years.
(8) How much loan did Paul borrow 5 years ago at a rate of simple interest 2% per annum, if he paid $7370 to clear it?
(9) What amount does Susan have to pay after 6 years if he takes a loan of $3650 at 4% simple interest?
(10) William took a loan of $5000 at the rate of 6% simple interest per annum. If he paid an amount of $6800 to clear the loan, then find the time period of the loan.