Question:
Find the amount to be paid if Richard borrowed a sum of $5600 at 5% simple interest for 8 years.
Correct Answer
$7840
Solution And Explanation
Solution
Given,
Principal (P) = $5600
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) = $5600 × 5% × 8
= $5600 ×5/100 × 8
= 5600 × 5 × 8/100
= 28000 × 8/100
= 224000/100
= $2240
Thus, Simple Interest = $2240
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 = $5600 + $2240
= $7840
Thus, Amount to be paid = $7840 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 = $5600
Rate of Simple Interest (SI) or (R) = 5%
And, Time (t) = 8 years
Thus, Amount (A)
= $5600 + ($5600 × 5% × 8)
= $5600 + ($5600 ×5/100 × 8)
= $5600 + (5600 × 5 × 8/100)
= $5600 + (28000 × 8/100)
= $5600 + (224000/100)
= $5600 + $2240 = $7840
Thus, Amount (A) to be paid = $7840 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 $5600, the simple interest in 1 year
= 5/100 × 5600
= 5 × 5600/100
= 28000/100 = $280
Thus, simple interest for 1 year = $280
Therefore, simple interest for 8 years
= Simple interest for 1 year × 8
= $280 × 8 = $2240
Thus, Simple Interest (SI) = $2240
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $5600 + $2240
= $7840
Thus, Amount to be paid = $7840 Answer
Similar Questions
(1) Mark took a loan of $6800 at the rate of 8% simple interest per annum. If he paid an amount of $10608 to clear the loan, then find the time period of the loan.
(2) How much loan did Betty borrow 5 years ago at a rate of simple interest 4% per annum, if he paid $7500 to clear it?
(3) Calculate the amount due if Thomas borrowed a sum of $3800 at 4% simple interest for 4 years.
(4) Calculate the amount due if Linda borrowed a sum of $3350 at 4% simple interest for 3 years.
(5) What amount does Jennifer have to pay after 5 years if he takes a loan of $3250 at 5% simple interest?
(6) Calculate the amount due if Thomas borrowed a sum of $3800 at 10% simple interest for 4 years.
(7) David took a loan of $4800 at the rate of 7% simple interest per annum. If he paid an amount of $8160 to clear the loan, then find the time period of the loan.
(8) Kenneth had to pay $5600 in order to furnish the loan taken 3 years before. If the rate of simple interest was 4% then find the sum borrowed.
(9) Calculate the amount due if Michael borrowed a sum of $3300 at 5% simple interest for 4 years.
(10) Find the amount to be paid if Susan borrowed a sum of $5650 at 4% simple interest for 8 years.