Question:
Find the amount to be paid if David borrowed a sum of $5400 at 2% simple interest for 8 years.
Correct Answer
$6264
Solution And Explanation
Solution
Given,
Principal (P) = $5400
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) = $5400 × 2% × 8
= $5400 ×2/100 × 8
= 5400 × 2 × 8/100
= 10800 × 8/100
= 86400/100
= $864
Thus, Simple Interest = $864
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 = $5400 + $864
= $6264
Thus, Amount to be paid = $6264 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 = $5400
Rate of Simple Interest (SI) or (R) = 2%
And, Time (t) = 8 years
Thus, Amount (A)
= $5400 + ($5400 × 2% × 8)
= $5400 + ($5400 ×2/100 × 8)
= $5400 + (5400 × 2 × 8/100)
= $5400 + (10800 × 8/100)
= $5400 + (86400/100)
= $5400 + $864 = $6264
Thus, Amount (A) to be paid = $6264 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 $5400, the simple interest in 1 year
= 2/100 × 5400
= 2 × 5400/100
= 10800/100 = $108
Thus, simple interest for 1 year = $108
Therefore, simple interest for 8 years
= Simple interest for 1 year × 8
= $108 × 8 = $864
Thus, Simple Interest (SI) = $864
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $5400 + $864
= $6264
Thus, Amount to be paid = $6264 Answer
Similar Questions
(1) What amount does Jennifer have to pay after 6 years if he takes a loan of $3250 at 5% simple interest?
(2) What amount does Michael have to pay after 6 years if he takes a loan of $3300 at 10% simple interest?
(3) Calculate the amount due after 10 years if Joseph borrowed a sum of $5700 at a rate of 10% simple interest.
(4) Matthew had to pay $4830 in order to furnish the loan taken 3 years before. If the rate of simple interest was 5% then find the sum borrowed.
(5) Find the amount to be paid if Karen borrowed a sum of $5950 at 7% simple interest for 8 years.
(6) Calculate the amount due after 9 years if John borrowed a sum of $5200 at a rate of 9% simple interest.
(7) Calculate the amount due if Richard borrowed a sum of $3600 at 5% simple interest for 4 years.
(8) Calculate the amount due if John borrowed a sum of $3200 at 6% simple interest for 4 years.
(9) Mark took a loan of $6800 at the rate of 9% simple interest per annum. If he paid an amount of $12308 to clear the loan, then find the time period of the loan.
(10) Richard took a loan of $5200 at the rate of 10% simple interest per annum. If he paid an amount of $9360 to clear the loan, then find the time period of the loan.