Question:
Find the amount to be paid if Karen borrowed a sum of $5950 at 2% simple interest for 8 years.
Correct Answer
$6902
Solution And Explanation
Solution
Given,
Principal (P) = $5950
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) = $5950 × 2% × 8
= $5950 ×2/100 × 8
= 5950 × 2 × 8/100
= 11900 × 8/100
= 95200/100
= $952
Thus, Simple Interest = $952
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 = $5950 + $952
= $6902
Thus, Amount to be paid = $6902 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 = $5950
Rate of Simple Interest (SI) or (R) = 2%
And, Time (t) = 8 years
Thus, Amount (A)
= $5950 + ($5950 × 2% × 8)
= $5950 + ($5950 ×2/100 × 8)
= $5950 + (5950 × 2 × 8/100)
= $5950 + (11900 × 8/100)
= $5950 + (95200/100)
= $5950 + $952 = $6902
Thus, Amount (A) to be paid = $6902 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 $5950, the simple interest in 1 year
= 2/100 × 5950
= 2 × 5950/100
= 11900/100 = $119
Thus, simple interest for 1 year = $119
Therefore, simple interest for 8 years
= Simple interest for 1 year × 8
= $119 × 8 = $952
Thus, Simple Interest (SI) = $952
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $5950 + $952
= $6902
Thus, Amount to be paid = $6902 Answer
Similar Questions
(1) Find the amount to be paid if Patricia borrowed a sum of $5150 at 6% simple interest for 7 years.
(2) Calculate the amount due if Jennifer borrowed a sum of $3250 at 6% simple interest for 4 years.
(3) Steven had to pay $4876 in order to furnish the loan taken 3 years before. If the rate of simple interest was 2% then find the sum borrowed.
(4) How much loan did Joseph borrow 5 years ago at a rate of simple interest 2% per annum, if he paid $6270 to clear it?
(5) Calculate the amount due if Michael borrowed a sum of $3300 at 4% simple interest for 4 years.
(6) If Elizabeth paid $3864 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 Christopher have to pay after 6 years if he takes a loan of $4000 at 8% simple interest?
(8) Thomas took a loan of $5600 at the rate of 8% simple interest per annum. If he paid an amount of $9184 to clear the loan, then find the time period of the loan.
(9) Lisa took a loan of $6100 at the rate of 7% simple interest per annum. If he paid an amount of $10370 to clear the loan, then find the time period of the loan.
(10) Sarah had to pay $4312 in order to furnish the loan taken 3 years before. If the rate of simple interest was 4% then find the sum borrowed.