Question:
Find the amount to be paid if Richard borrowed a sum of $5600 at 2% simple interest for 8 years.
Correct Answer
$6496
Solution And Explanation
Solution
Given,
Principal (P) = $5600
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) = $5600 × 2% × 8
= $5600 ×2/100 × 8
= 5600 × 2 × 8/100
= 11200 × 8/100
= 89600/100
= $896
Thus, Simple Interest = $896
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 = $5600 + $896
= $6496
Thus, Amount to be paid = $6496 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 = $5600
Rate of Simple Interest (SI) or (R) = 2%
And, Time (t) = 8 years
Thus, Amount (A)
= $5600 + ($5600 × 2% × 8)
= $5600 + ($5600 ×2/100 × 8)
= $5600 + (5600 × 2 × 8/100)
= $5600 + (11200 × 8/100)
= $5600 + (89600/100)
= $5600 + $896 = $6496
Thus, Amount (A) to be paid = $6496 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 $5600, the simple interest in 1 year
= 2/100 × 5600
= 2 × 5600/100
= 11200/100 = $112
Thus, simple interest for 1 year = $112
Therefore, simple interest for 8 years
= Simple interest for 1 year × 8
= $112 × 8 = $896
Thus, Simple Interest (SI) = $896
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $5600 + $896
= $6496
Thus, Amount to be paid = $6496 Answer
Similar Questions
(1) William had to pay $3710 in order to furnish the loan taken 3 years before. If the rate of simple interest was 2% then find the sum borrowed.
(2) How much loan did Jeffrey borrow 5 years ago at a rate of simple interest 3% per annum, if he paid $8970 to clear it?
(3) Calculate the amount due after 10 years if Elizabeth borrowed a sum of $5450 at a rate of 4% simple interest.
(4) Anthony took a loan of $6600 at the rate of 7% simple interest per annum. If he paid an amount of $9372 to clear the loan, then find the time period of the loan.
(5) What amount does Susan have to pay after 5 years if he takes a loan of $3650 at 7% simple interest?
(6) If Jessica paid $4200 to settle his loan which he had taken 4 years before at a simple interest of 3%, then find the loan taken.
(7) What amount does Thomas have to pay after 5 years if he takes a loan of $3800 at 7% simple interest?
(8) What amount does Charles have to pay after 6 years if he takes a loan of $3900 at 5% simple interest?
(9) David had to pay $3910 in order to furnish the loan taken 3 years before. If the rate of simple interest was 5% then find the sum borrowed.
(10) How much loan did Elizabeth borrow 5 years ago at a rate of simple interest 3% per annum, if he paid $6267.5 to clear it?