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 after 10 years if Susan borrowed a sum of $5650 at a rate of 5% simple interest.
(2) In how much time a principal of $3000 will amount to $3270 at a simple interest of 3% per annum?
(3) Calculate the amount due if James borrowed a sum of $3000 at 9% simple interest for 4 years.
(4) Jessica took a loan of $5500 at the rate of 6% simple interest per annum. If he paid an amount of $8800 to clear the loan, then find the time period of the loan.
(5) Find the amount to be paid if Thomas borrowed a sum of $5800 at 5% simple interest for 7 years.
(6) Find the amount to be paid if Mary borrowed a sum of $5050 at 4% simple interest for 7 years.
(7) Calculate the amount due if William borrowed a sum of $3500 at 4% simple interest for 3 years.
(8) How much loan did Dorothy borrow 5 years ago at a rate of simple interest 5% per annum, if he paid $9062.5 to clear it?
(9) What amount will be due after 2 years if Anthony borrowed a sum of $3650 at a 8% simple interest?
(10) James took a loan of $4000 at the rate of 8% simple interest per annum. If he paid an amount of $5920 to clear the loan, then find the time period of the loan.