Question:
Find the amount to be paid if Barbara borrowed a sum of $5550 at 2% simple interest for 8 years.
Correct Answer
$6438
Solution And Explanation
Solution
Given,
Principal (P) = $5550
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) = $5550 × 2% × 8
= $5550 ×2/100 × 8
= 5550 × 2 × 8/100
= 11100 × 8/100
= 88800/100
= $888
Thus, Simple Interest = $888
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 = $5550 + $888
= $6438
Thus, Amount to be paid = $6438 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 = $5550
Rate of Simple Interest (SI) or (R) = 2%
And, Time (t) = 8 years
Thus, Amount (A)
= $5550 + ($5550 × 2% × 8)
= $5550 + ($5550 ×2/100 × 8)
= $5550 + (5550 × 2 × 8/100)
= $5550 + (11100 × 8/100)
= $5550 + (88800/100)
= $5550 + $888 = $6438
Thus, Amount (A) to be paid = $6438 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 $5550, the simple interest in 1 year
= 2/100 × 5550
= 2 × 5550/100
= 11100/100 = $111
Thus, simple interest for 1 year = $111
Therefore, simple interest for 8 years
= Simple interest for 1 year × 8
= $111 × 8 = $888
Thus, Simple Interest (SI) = $888
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $5550 + $888
= $6438
Thus, Amount to be paid = $6438 Answer
Similar Questions
(1) Anthony had to pay $4687 in order to furnish the loan taken 3 years before. If the rate of simple interest was 3% then find the sum borrowed.
(2) Calculate the amount due if David borrowed a sum of $3400 at 7% simple interest for 4 years.
(3) Calculate the amount due if Susan borrowed a sum of $3650 at 10% simple interest for 3 years.
(4) Michael took a loan of $4600 at the rate of 10% simple interest per annum. If he paid an amount of $8280 to clear the loan, then find the time period of the loan.
(5) Joseph took a loan of $5400 at the rate of 7% simple interest per annum. If he paid an amount of $8046 to clear the loan, then find the time period of the loan.
(6) Calculate the amount due if James borrowed a sum of $3000 at 8% simple interest for 4 years.
(7) Calculate the amount due after 10 years if Michael borrowed a sum of $5300 at a rate of 5% simple interest.
(8) If David paid $3944 to settle his loan which he had taken 4 years before at a simple interest of 4%, then find the loan taken.
(9) Calculate the amount due if Charles borrowed a sum of $3900 at 3% simple interest for 3 years.
(10) What amount does Elizabeth have to pay after 6 years if he takes a loan of $3450 at 5% simple interest?