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) Find the amount to be paid if Charles borrowed a sum of $5900 at 6% simple interest for 8 years.
(2) What amount will be due after 2 years if William borrowed a sum of $3250 at a 4% simple interest?
(3) Calculate the amount due if William borrowed a sum of $3500 at 8% simple interest for 4 years.
(4) What amount will be due after 2 years if Donald borrowed a sum of $3750 at a 8% simple interest?
(5) Jennifer took a loan of $4500 at the rate of 6% simple interest per annum. If he paid an amount of $6390 to clear the loan, then find the time period of the loan.
(6) William took a loan of $5000 at the rate of 6% simple interest per annum. If he paid an amount of $7400 to clear the loan, then find the time period of the loan.
(7) How much loan did Melissa borrow 5 years ago at a rate of simple interest 3% per annum, if he paid $8452.5 to clear it?
(8) How much loan did Ashley borrow 5 years ago at a rate of simple interest 3% per annum, if he paid $7532.5 to clear it?
(9) What amount will be due after 2 years if Christopher borrowed a sum of $3500 at a 7% simple interest?
(10) What amount will be due after 2 years if Michael borrowed a sum of $3150 at a 9% simple interest?