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) Calculate the amount due if Jessica borrowed a sum of $3750 at 8% simple interest for 4 years.
(2) In how much time a principal of $3100 will amount to $3596 at a simple interest of 4% per annum?
(3) What amount does Charles have to pay after 5 years if he takes a loan of $3900 at 4% simple interest?
(4) What amount does Linda have to pay after 5 years if he takes a loan of $3350 at 8% simple interest?
(5) Calculate the amount due if Michael borrowed a sum of $3300 at 10% simple interest for 4 years.
(6) Calculate the amount due if Karen borrowed a sum of $3950 at 8% simple interest for 4 years.
(7) Calculate the amount due after 9 years if Michael borrowed a sum of $5300 at a rate of 3% simple interest.
(8) What amount does James have to pay after 5 years if he takes a loan of $3000 at 3% simple interest?
(9) Calculate the amount due if David borrowed a sum of $3400 at 5% simple interest for 3 years.
(10) How much loan did Amanda borrow 5 years ago at a rate of simple interest 2% per annum, if he paid $7865 to clear it?