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 Robert borrowed a sum of $5100 at a rate of 5% simple interest.
(2) In how much time a principal of $3050 will amount to $3507.5 at a simple interest of 5% per annum?
(3) What amount will be due after 2 years if Charles borrowed a sum of $3450 at a 7% simple interest?
(4) Jessica had to pay $4087.5 in order to furnish the loan taken 3 years before. If the rate of simple interest was 3% then find the sum borrowed.
(5) What amount does Karen have to pay after 5 years if he takes a loan of $3950 at 4% simple interest?
(6) Sandra took a loan of $6900 at the rate of 9% simple interest per annum. If he paid an amount of $11247 to clear the loan, then find the time period of the loan.
(7) Calculate the amount due if Richard borrowed a sum of $3600 at 5% simple interest for 4 years.
(8) Find the amount to be paid if Joseph borrowed a sum of $5700 at 5% simple interest for 8 years.
(9) Find the amount to be paid if Jennifer borrowed a sum of $5250 at 4% simple interest for 8 years.
(10) Calculate the amount due if Joseph borrowed a sum of $3700 at 10% simple interest for 3 years.