Question:
Find the amount to be paid if Jennifer borrowed a sum of $5250 at 5% simple interest for 8 years.
Correct Answer
$7350
Solution And Explanation
Solution
Given,
Principal (P) = $5250
Rate of Simple Interest (SI) = 5%
Time (t) = 8 years
Thus, Amount (A) = ?
The Rate of Interest is always calculated per annum, i.e. per year.
Thus, here 5% simple interest means, Rate of Simple Interest (SI) is 5% 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 × 5% × 8
= $5250 ×5/100 × 8
= 5250 × 5 × 8/100
= 26250 × 8/100
= 210000/100
= $2100
Thus, Simple Interest = $2100
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 + $2100
= $7350
Thus, Amount to be paid = $7350 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) = 5%
And, Time (t) = 8 years
Thus, Amount (A)
= $5250 + ($5250 × 5% × 8)
= $5250 + ($5250 ×5/100 × 8)
= $5250 + (5250 × 5 × 8/100)
= $5250 + (26250 × 8/100)
= $5250 + (210000/100)
= $5250 + $2100 = $7350
Thus, Amount (A) to be paid = $7350 Answer
Method (3) Unitary Method
Calculation of Amount using Unitary Method
Calculation of Interest using Unitary Method
Here, given Rate of Simple Interest = 5%
This, means, $5 per $100 per year
∵ For $100, the simple interest for 1 year = $5
∴ For $1, the simple interest for 1 year = 5/100
∴ For $5250, the simple interest in 1 year
= 5/100 × 5250
= 5 × 5250/100
= 26250/100 = $262.5
Thus, simple interest for 1 year = $262.5
Therefore, simple interest for 8 years
= Simple interest for 1 year × 8
= $262.5 × 8 = $2100
Thus, Simple Interest (SI) = $2100
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $5250 + $2100
= $7350
Thus, Amount to be paid = $7350 Answer
Similar Questions
(1) If Nancy paid $4814 to settle his loan which he had taken 4 years before at a simple interest of 4%, then find the loan taken.
(2) John took a loan of $4400 at the rate of 10% simple interest per annum. If he paid an amount of $7480 to clear the loan, then find the time period of the loan.
(3) Linda took a loan of $4700 at the rate of 10% simple interest per annum. If he paid an amount of $8930 to clear the loan, then find the time period of the loan.
(4) How much loan did Jacob borrow 5 years ago at a rate of simple interest 2% per annum, if he paid $8800 to clear it?
(5) How much loan did Sharon borrow 5 years ago at a rate of simple interest 5% per annum, if he paid $9687.5 to clear it?
(6) Find the amount to be paid if Linda borrowed a sum of $5350 at 10% simple interest for 8 years.
(7) Calculate the amount due if Elizabeth borrowed a sum of $3450 at 2% simple interest for 3 years.
(8) How much loan did Ryan borrow 5 years ago at a rate of simple interest 3% per annum, if he paid $9085 to clear it?
(9) Find the amount to be paid if Richard borrowed a sum of $5600 at 3% simple interest for 8 years.
(10) Calculate the amount due if Karen borrowed a sum of $3950 at 6% simple interest for 4 years.