Question:
Find the amount to be paid if William borrowed a sum of $5500 at 4% simple interest for 8 years.
Correct Answer
$7260
Solution And Explanation
Solution
Given,
Principal (P) = $5500
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) = $5500 × 4% × 8
= $5500 ×4/100 × 8
= 5500 × 4 × 8/100
= 22000 × 8/100
= 176000/100
= $1760
Thus, Simple Interest = $1760
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 = $5500 + $1760
= $7260
Thus, Amount to be paid = $7260 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 = $5500
Rate of Simple Interest (SI) or (R) = 4%
And, Time (t) = 8 years
Thus, Amount (A)
= $5500 + ($5500 × 4% × 8)
= $5500 + ($5500 ×4/100 × 8)
= $5500 + (5500 × 4 × 8/100)
= $5500 + (22000 × 8/100)
= $5500 + (176000/100)
= $5500 + $1760 = $7260
Thus, Amount (A) to be paid = $7260 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 $5500, the simple interest in 1 year
= 4/100 × 5500
= 4 × 5500/100
= 22000/100 = $220
Thus, simple interest for 1 year = $220
Therefore, simple interest for 8 years
= Simple interest for 1 year × 8
= $220 × 8 = $1760
Thus, Simple Interest (SI) = $1760
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $5500 + $1760
= $7260
Thus, Amount to be paid = $7260 Answer
Similar Questions
(1) Find the amount to be paid if Robert borrowed a sum of $5100 at 2% simple interest for 7 years.
(2) Susan took a loan of $5300 at the rate of 10% simple interest per annum. If he paid an amount of $9010 to clear the loan, then find the time period of the loan.
(3) Find the amount to be paid if Joseph borrowed a sum of $5700 at 2% simple interest for 8 years.
(4) Calculate the amount due after 9 years if Karen borrowed a sum of $5950 at a rate of 6% simple interest.
(5) What amount does Linda have to pay after 6 years if he takes a loan of $3350 at 2% simple interest?
(6) What amount does John have to pay after 5 years if he takes a loan of $3200 at 7% simple interest?
(7) Calculate the amount due after 9 years if Jessica borrowed a sum of $5750 at a rate of 6% simple interest.
(8) Calculate the amount due if Susan borrowed a sum of $3650 at 3% simple interest for 3 years.
(9) Calculate the amount due after 9 years if Michael borrowed a sum of $5300 at a rate of 8% simple interest.
(10) Barbara took a loan of $5100 at the rate of 8% simple interest per annum. If he paid an amount of $8364 to clear the loan, then find the time period of the loan.