Question:
Find the amount to be paid if William borrowed a sum of $5500 at 5% simple interest for 8 years.
Correct Answer
$7700
Solution And Explanation
Solution
Given,
Principal (P) = $5500
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) = $5500 × 5% × 8
= $5500 ×5/100 × 8
= 5500 × 5 × 8/100
= 27500 × 8/100
= 220000/100
= $2200
Thus, Simple Interest = $2200
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 + $2200
= $7700
Thus, Amount to be paid = $7700 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) = 5%
And, Time (t) = 8 years
Thus, Amount (A)
= $5500 + ($5500 × 5% × 8)
= $5500 + ($5500 ×5/100 × 8)
= $5500 + (5500 × 5 × 8/100)
= $5500 + (27500 × 8/100)
= $5500 + (220000/100)
= $5500 + $2200 = $7700
Thus, Amount (A) to be paid = $7700 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 $5500, the simple interest in 1 year
= 5/100 × 5500
= 5 × 5500/100
= 27500/100 = $275
Thus, simple interest for 1 year = $275
Therefore, simple interest for 8 years
= Simple interest for 1 year × 8
= $275 × 8 = $2200
Thus, Simple Interest (SI) = $2200
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $5500 + $2200
= $7700
Thus, Amount to be paid = $7700 Answer
Similar Questions
(1) If Barbara paid $3976 to settle his loan which he had taken 4 years before at a simple interest of 3%, then find the loan taken.
(2) In how much time a principal of $3150 will amount to $3654 at a simple interest of 4% per annum?
(3) What amount does Susan have to pay after 5 years if he takes a loan of $3650 at 4% simple interest?
(4) Calculate the amount due if Joseph borrowed a sum of $3700 at 3% simple interest for 4 years.
(5) What amount does Sarah have to pay after 6 years if he takes a loan of $3850 at 2% simple interest?
(6) Richard took a loan of $5200 at the rate of 6% simple interest per annum. If he paid an amount of $7072 to clear the loan, then find the time period of the loan.
(7) John took a loan of $4400 at the rate of 7% simple interest per annum. If he paid an amount of $7172 to clear the loan, then find the time period of the loan.
(8) What amount does Robert have to pay after 5 years if he takes a loan of $3100 at 4% simple interest?
(9) Donald took a loan of $7000 at the rate of 6% simple interest per annum. If he paid an amount of $9940 to clear the loan, then find the time period of the loan.
(10) Mary took a loan of $4100 at the rate of 10% simple interest per annum. If he paid an amount of $6970 to clear the loan, then find the time period of the loan.