Question:
Find the amount to be paid if James borrowed a sum of $5000 at 7% simple interest for 8 years.
Correct Answer
$7800
Solution And Explanation
Solution
Given,
Principal (P) = $5000
Rate of Simple Interest (SI) = 7%
Time (t) = 8 years
Thus, Amount (A) = ?
The Rate of Interest is always calculated per annum, i.e. per year.
Thus, here 7% simple interest means, Rate of Simple Interest (SI) is 7% 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) = $5000 × 7% × 8
= $5000 ×7/100 × 8
= 5000 × 7 × 8/100
= 35000 × 8/100
= 280000/100
= $2800
Thus, Simple Interest = $2800
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 = $5000 + $2800
= $7800
Thus, Amount to be paid = $7800 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 = $5000
Rate of Simple Interest (SI) or (R) = 7%
And, Time (t) = 8 years
Thus, Amount (A)
= $5000 + ($5000 × 7% × 8)
= $5000 + ($5000 ×7/100 × 8)
= $5000 + (5000 × 7 × 8/100)
= $5000 + (35000 × 8/100)
= $5000 + (280000/100)
= $5000 + $2800 = $7800
Thus, Amount (A) to be paid = $7800 Answer
Method (3) Unitary Method
Calculation of Amount using Unitary Method
Calculation of Interest using Unitary Method
Here, given Rate of Simple Interest = 7%
This, means, $7 per $100 per year
∵ For $100, the simple interest for 1 year = $7
∴ For $1, the simple interest for 1 year = 7/100
∴ For $5000, the simple interest in 1 year
= 7/100 × 5000
= 7 × 5000/100
= 35000/100 = $350
Thus, simple interest for 1 year = $350
Therefore, simple interest for 8 years
= Simple interest for 1 year × 8
= $350 × 8 = $2800
Thus, Simple Interest (SI) = $2800
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $5000 + $2800
= $7800
Thus, Amount to be paid = $7800 Answer
Similar Questions
(1) What amount does Jessica have to pay after 6 years if he takes a loan of $3750 at 4% simple interest?
(2) Calculate the amount due if Richard borrowed a sum of $3600 at 3% simple interest for 4 years.
(3) What amount will be due after 2 years if Matthew borrowed a sum of $3600 at a 9% simple interest?
(4) What amount does David have to pay after 5 years if he takes a loan of $3400 at 3% simple interest?
(5) Find the amount to be paid if Sarah borrowed a sum of $5850 at 6% simple interest for 8 years.
(6) How much loan did Barbara borrow 5 years ago at a rate of simple interest 4% per annum, if he paid $6660 to clear it?
(7) What amount does Mary have to pay after 5 years if he takes a loan of $3050 at 5% simple interest?
(8) What amount does Charles have to pay after 5 years if he takes a loan of $3900 at 10% simple interest?
(9) If Michelle paid $5346 to settle his loan which he had taken 4 years before at a simple interest of 2%, then find the loan taken.
(10) Find the amount to be paid if Christopher borrowed a sum of $6000 at 7% simple interest for 8 years.