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) Calculate the amount due after 10 years if Richard borrowed a sum of $5600 at a rate of 2% simple interest.
(2) Sarah took a loan of $5700 at the rate of 10% simple interest per annum. If he paid an amount of $9120 to clear the loan, then find the time period of the loan.
(3) If Barbara paid $4260 to settle his loan which he had taken 4 years before at a simple interest of 5%, then find the loan taken.
(4) Jennifer had to pay $3640 in order to furnish the loan taken 3 years before. If the rate of simple interest was 4% then find the sum borrowed.
(5) What amount does Susan have to pay after 6 years if he takes a loan of $3650 at 8% simple interest?
(6) Joshua had to pay $5635 in order to furnish the loan taken 3 years before. If the rate of simple interest was 5% then find the sum borrowed.
(7) Barbara took a loan of $5100 at the rate of 7% simple interest per annum. If he paid an amount of $7956 to clear the loan, then find the time period of the loan.
(8) Daniel took a loan of $6200 at the rate of 6% simple interest per annum. If he paid an amount of $9176 to clear the loan, then find the time period of the loan.
(9) Find the amount to be paid if Jessica borrowed a sum of $5750 at 8% simple interest for 7 years.
(10) Calculate the amount due if Charles borrowed a sum of $3900 at 2% simple interest for 3 years.