Question:
Find the amount to be paid if John borrowed a sum of $5200 at 4% simple interest for 8 years.
Correct Answer
$6864
Solution And Explanation
Solution
Given,
Principal (P) = $5200
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) = $5200 × 4% × 8
= $5200 ×4/100 × 8
= 5200 × 4 × 8/100
= 20800 × 8/100
= 166400/100
= $1664
Thus, Simple Interest = $1664
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 = $5200 + $1664
= $6864
Thus, Amount to be paid = $6864 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 = $5200
Rate of Simple Interest (SI) or (R) = 4%
And, Time (t) = 8 years
Thus, Amount (A)
= $5200 + ($5200 × 4% × 8)
= $5200 + ($5200 ×4/100 × 8)
= $5200 + (5200 × 4 × 8/100)
= $5200 + (20800 × 8/100)
= $5200 + (166400/100)
= $5200 + $1664 = $6864
Thus, Amount (A) to be paid = $6864 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 $5200, the simple interest in 1 year
= 4/100 × 5200
= 4 × 5200/100
= 20800/100 = $208
Thus, simple interest for 1 year = $208
Therefore, simple interest for 8 years
= Simple interest for 1 year × 8
= $208 × 8 = $1664
Thus, Simple Interest (SI) = $1664
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $5200 + $1664
= $6864
Thus, Amount to be paid = $6864 Answer
Similar Questions
(1) Anthony had to pay $4558 in order to furnish the loan taken 3 years before. If the rate of simple interest was 2% then find the sum borrowed.
(2) Margaret took a loan of $6700 at the rate of 6% simple interest per annum. If he paid an amount of $10318 to clear the loan, then find the time period of the loan.
(3) What amount does Sarah have to pay after 5 years if he takes a loan of $3850 at 2% simple interest?
(4) What amount will be due after 2 years if Mark borrowed a sum of $3700 at a 8% simple interest?
(5) If Jessica paid $4050 to settle his loan which he had taken 4 years before at a simple interest of 2%, then find the loan taken.
(6) What amount will be due after 2 years if Andrew borrowed a sum of $3900 at a 7% simple interest?
(7) Find the amount to be paid if Barbara borrowed a sum of $5550 at 4% simple interest for 8 years.
(8) Donald took a loan of $7000 at the rate of 9% simple interest per annum. If he paid an amount of $13300 to clear the loan, then find the time period of the loan.
(9) What amount does Thomas have to pay after 6 years if he takes a loan of $3800 at 5% simple interest?
(10) Find the amount to be paid if Jessica borrowed a sum of $5750 at 7% simple interest for 8 years.