Question:
Find the amount to be paid if James borrowed a sum of $5000 at 4% simple interest for 8 years.
Correct Answer
$6600
Solution And Explanation
Solution
Given,
Principal (P) = $5000
Rate of Simple Interest (SI) = 4%
Time (t) = 8 years
Thus, Amount (A) = ?
The Rate of Interest is always calculated per annum, i.e. per year.
Thus, here 4% simple interest means, Rate of Simple Interest (SI) is 4% 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) = $5000 × 4% × 8
= $5000 ×4/100 × 8
= 5000 × 4 × 8/100
= 20000 × 8/100
= 160000/100
= $1600
Thus, Simple Interest = $1600
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 = $5000 + $1600
= $6600
Thus, Amount to be paid = $6600 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 = $5000
Rate of Simple Interest (SI) or (R) = 4%
And, Time (t) = 8 years
Thus, Amount (A)
= $5000 + ($5000 × 4% × 8)
= $5000 + ($5000 ×4/100 × 8)
= $5000 + (5000 × 4 × 8/100)
= $5000 + (20000 × 8/100)
= $5000 + (160000/100)
= $5000 + $1600 = $6600
Thus, Amount (A) to be paid = $6600 Answer
Method (3) Unitary Method
Calculation of Amount using Unitary Method
Calculation of Interest using Unitary Method
Here, given Rate of Simple Interest = 4%
This, means, $4 per $100 per year
∵ For $100, the simple interest for 1 year = $4
∴ For $1, the simple interest for 1 year = 4/100
∴ For $5000, the simple interest in 1 year
= 4/100 × 5000
= 4 × 5000/100
= 20000/100 = $200
Thus, simple interest for 1 year = $200
Therefore, simple interest for 8 years
= Simple interest for 1 year × 8
= $200 × 8 = $1600
Thus, Simple Interest (SI) = $1600
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $5000 + $1600
= $6600
Thus, Amount to be paid = $6600 Answer
Similar Questions
(1) Calculate the amount due if Michael borrowed a sum of $3300 at 9% simple interest for 4 years.
(2) What amount does Michael have to pay after 5 years if he takes a loan of $3300 at 7% simple interest?
(3) Karen took a loan of $5900 at the rate of 10% simple interest per annum. If he paid an amount of $11210 to clear the loan, then find the time period of the loan.
(4) Daniel took a loan of $6200 at the rate of 9% simple interest per annum. If he paid an amount of $11222 to clear the loan, then find the time period of the loan.
(5) Calculate the amount due after 9 years if Thomas borrowed a sum of $5800 at a rate of 4% simple interest.
(6) Find the amount to be paid if Karen borrowed a sum of $5950 at 6% simple interest for 7 years.
(7) How much loan did Margaret borrow 5 years ago at a rate of simple interest 4% per annum, if he paid $7620 to clear it?
(8) Find the amount to be paid if Jennifer borrowed a sum of $5250 at 4% simple interest for 7 years.
(9) If Ashley paid $5096 to settle his loan which he had taken 4 years before at a simple interest of 3%, then find the loan taken.
(10) How much loan did Susan borrow 5 years ago at a rate of simple interest 4% per annum, if he paid $6780 to clear it?