Question:
Find the amount to be paid if Michael borrowed a sum of $5300 at 2% simple interest for 8 years.
Correct Answer
$6148
Solution And Explanation
Solution
Given,
Principal (P) = $5300
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) = $5300 × 2% × 8
= $5300 ×2/100 × 8
= 5300 × 2 × 8/100
= 10600 × 8/100
= 84800/100
= $848
Thus, Simple Interest = $848
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 = $5300 + $848
= $6148
Thus, Amount to be paid = $6148 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 = $5300
Rate of Simple Interest (SI) or (R) = 2%
And, Time (t) = 8 years
Thus, Amount (A)
= $5300 + ($5300 × 2% × 8)
= $5300 + ($5300 ×2/100 × 8)
= $5300 + (5300 × 2 × 8/100)
= $5300 + (10600 × 8/100)
= $5300 + (84800/100)
= $5300 + $848 = $6148
Thus, Amount (A) to be paid = $6148 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 $5300, the simple interest in 1 year
= 2/100 × 5300
= 2 × 5300/100
= 10600/100 = $106
Thus, simple interest for 1 year = $106
Therefore, simple interest for 8 years
= Simple interest for 1 year × 8
= $106 × 8 = $848
Thus, Simple Interest (SI) = $848
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $5300 + $848
= $6148
Thus, Amount to be paid = $6148 Answer
Similar Questions
(1) Calculate the amount due after 10 years if Susan borrowed a sum of $5650 at a rate of 6% simple interest.
(2) How much loan did William borrow 5 years ago at a rate of simple interest 5% per annum, if he paid $6875 to clear it?
(3) Calculate the amount due if James borrowed a sum of $3000 at 8% simple interest for 4 years.
(4) Kenneth had to pay $5600 in order to furnish the loan taken 3 years before. If the rate of simple interest was 4% then find the sum borrowed.
(5) Calculate the amount due if Karen borrowed a sum of $3950 at 4% simple interest for 3 years.
(6) Barbara had to pay $3976 in order to furnish the loan taken 3 years before. If the rate of simple interest was 4% then find the sum borrowed.
(7) What amount will be due after 2 years if Joshua borrowed a sum of $3950 at a 9% simple interest?
(8) Calculate the amount due after 9 years if Susan borrowed a sum of $5650 at a rate of 6% simple interest.
(9) What amount will be due after 2 years if Joseph borrowed a sum of $3350 at a 10% simple interest?
(10) Karen had to pay $4187 in order to furnish the loan taken 3 years before. If the rate of simple interest was 2% then find the sum borrowed.