Question:
Find the amount to be paid if Linda borrowed a sum of $5350 at 2% simple interest for 8 years.
Correct Answer
$6206
Solution And Explanation
Solution
Given,
Principal (P) = $5350
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) = $5350 × 2% × 8
= $5350 ×2/100 × 8
= 5350 × 2 × 8/100
= 10700 × 8/100
= 85600/100
= $856
Thus, Simple Interest = $856
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 = $5350 + $856
= $6206
Thus, Amount to be paid = $6206 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 = $5350
Rate of Simple Interest (SI) or (R) = 2%
And, Time (t) = 8 years
Thus, Amount (A)
= $5350 + ($5350 × 2% × 8)
= $5350 + ($5350 ×2/100 × 8)
= $5350 + (5350 × 2 × 8/100)
= $5350 + (10700 × 8/100)
= $5350 + (85600/100)
= $5350 + $856 = $6206
Thus, Amount (A) to be paid = $6206 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 $5350, the simple interest in 1 year
= 2/100 × 5350
= 2 × 5350/100
= 10700/100 = $107
Thus, simple interest for 1 year = $107
Therefore, simple interest for 8 years
= Simple interest for 1 year × 8
= $107 × 8 = $856
Thus, Simple Interest (SI) = $856
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $5350 + $856
= $6206
Thus, Amount to be paid = $6206 Answer
Similar Questions
(1) Calculate the amount due if Thomas borrowed a sum of $3800 at 10% simple interest for 4 years.
(2) Thomas took a loan of $5600 at the rate of 8% simple interest per annum. If he paid an amount of $9632 to clear the loan, then find the time period of the loan.
(3) Find the amount to be paid if Charles borrowed a sum of $5900 at 9% simple interest for 8 years.
(4) Donald took a loan of $7000 at the rate of 9% simple interest per annum. If he paid an amount of $11410 to clear the loan, then find the time period of the loan.
(5) Lisa took a loan of $6100 at the rate of 10% simple interest per annum. If he paid an amount of $9760 to clear the loan, then find the time period of the loan.
(6) Calculate the amount due if Elizabeth borrowed a sum of $3450 at 5% simple interest for 4 years.
(7) 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?
(8) Nancy took a loan of $6300 at the rate of 6% simple interest per annum. If he paid an amount of $8568 to clear the loan, then find the time period of the loan.
(9) James took a loan of $4000 at the rate of 6% simple interest per annum. If he paid an amount of $6160 to clear the loan, then find the time period of the loan.
(10) Robert had to pay $3472 in order to furnish the loan taken 3 years before. If the rate of simple interest was 4% then find the sum borrowed.