Question:
Find the amount to be paid if Jennifer borrowed a sum of $5250 at 4% simple interest for 8 years.
Correct Answer
$6930
Solution And Explanation
Solution
Given,
Principal (P) = $5250
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) = $5250 × 4% × 8
= $5250 ×4/100 × 8
= 5250 × 4 × 8/100
= 21000 × 8/100
= 168000/100
= $1680
Thus, Simple Interest = $1680
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 = $5250 + $1680
= $6930
Thus, Amount to be paid = $6930 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 = $5250
Rate of Simple Interest (SI) or (R) = 4%
And, Time (t) = 8 years
Thus, Amount (A)
= $5250 + ($5250 × 4% × 8)
= $5250 + ($5250 ×4/100 × 8)
= $5250 + (5250 × 4 × 8/100)
= $5250 + (21000 × 8/100)
= $5250 + (168000/100)
= $5250 + $1680 = $6930
Thus, Amount (A) to be paid = $6930 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 $5250, the simple interest in 1 year
= 4/100 × 5250
= 4 × 5250/100
= 21000/100 = $210
Thus, simple interest for 1 year = $210
Therefore, simple interest for 8 years
= Simple interest for 1 year × 8
= $210 × 8 = $1680
Thus, Simple Interest (SI) = $1680
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $5250 + $1680
= $6930
Thus, Amount to be paid = $6930 Answer
Similar Questions
(1) Calculate the amount due after 10 years if Jennifer borrowed a sum of $5250 at a rate of 2% simple interest.
(2) How much loan did Emily borrow 5 years ago at a rate of simple interest 3% per annum, if he paid $7762.5 to clear it?
(3) Find the amount to be paid if Thomas borrowed a sum of $5800 at 8% simple interest for 7 years.
(4) Mark took a loan of $6800 at the rate of 6% simple interest per annum. If he paid an amount of $9656 to clear the loan, then find the time period of the loan.
(5) What amount does Michael have to pay after 6 years if he takes a loan of $3300 at 6% simple interest?
(6) How much loan did Joseph borrow 5 years ago at a rate of simple interest 2% per annum, if he paid $6270 to clear it?
(7) In how much time a principal of $3200 will amount to $4000 at a simple interest of 5% per annum?
(8) Karen took a loan of $5900 at the rate of 10% simple interest per annum. If he paid an amount of $11800 to clear the loan, then find the time period of the loan.
(9) How much loan did James borrow 5 years ago at a rate of simple interest 3% per annum, if he paid $5750 to clear it?
(10) What amount does Linda have to pay after 6 years if he takes a loan of $3350 at 9% simple interest?