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) Calculate the amount due after 9 years if Christopher borrowed a sum of $6000 at a rate of 9% simple interest.
(2) Margaret had to pay $4611 in order to furnish the loan taken 3 years before. If the rate of simple interest was 2% then find the sum borrowed.
(3) Calculate the amount due after 9 years if Sarah borrowed a sum of $5850 at a rate of 4% simple interest.
(4) How much loan did Sandra borrow 5 years ago at a rate of simple interest 2% per annum, if he paid $7095 to clear it?
(5) How much loan did Mark borrow 5 years ago at a rate of simple interest 4% per annum, if he paid $7680 to clear it?
(6) Calculate the amount due if William borrowed a sum of $3500 at 8% simple interest for 4 years.
(7) Calculate the amount due after 9 years if Sarah borrowed a sum of $5850 at a rate of 8% simple interest.
(8) Robert took a loan of $4200 at the rate of 7% simple interest per annum. If he paid an amount of $6552 to clear the loan, then find the time period of the loan.
(9) What amount does Joseph have to pay after 5 years if he takes a loan of $3700 at 4% simple interest?
(10) How much loan did Amanda borrow 5 years ago at a rate of simple interest 5% per annum, if he paid $8937.5 to clear it?