Question:
Find the amount to be paid if James borrowed a sum of $5000 at 8% simple interest for 8 years.
Correct Answer
$8200
Solution And Explanation
Solution
Given,
Principal (P) = $5000
Rate of Simple Interest (SI) = 8%
Time (t) = 8 years
Thus, Amount (A) = ?
The Rate of Interest is always calculated per annum, i.e. per year.
Thus, here 8% simple interest means, Rate of Simple Interest (SI) is 8% 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 × 8% × 8
= $5000 ×8/100 × 8
= 5000 × 8 × 8/100
= 40000 × 8/100
= 320000/100
= $3200
Thus, Simple Interest = $3200
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 + $3200
= $8200
Thus, Amount to be paid = $8200 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) = 8%
And, Time (t) = 8 years
Thus, Amount (A)
= $5000 + ($5000 × 8% × 8)
= $5000 + ($5000 ×8/100 × 8)
= $5000 + (5000 × 8 × 8/100)
= $5000 + (40000 × 8/100)
= $5000 + (320000/100)
= $5000 + $3200 = $8200
Thus, Amount (A) to be paid = $8200 Answer
Method (3) Unitary Method
Calculation of Amount using Unitary Method
Calculation of Interest using Unitary Method
Here, given Rate of Simple Interest = 8%
This, means, $8 per $100 per year
∵ For $100, the simple interest for 1 year = $8
∴ For $1, the simple interest for 1 year = 8/100
∴ For $5000, the simple interest in 1 year
= 8/100 × 5000
= 8 × 5000/100
= 40000/100 = $400
Thus, simple interest for 1 year = $400
Therefore, simple interest for 8 years
= Simple interest for 1 year × 8
= $400 × 8 = $3200
Thus, Simple Interest (SI) = $3200
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $5000 + $3200
= $8200
Thus, Amount to be paid = $8200 Answer
Similar Questions
(1) Calculate the amount due if Michael borrowed a sum of $3300 at 10% simple interest for 4 years.
(2) Sandra took a loan of $6900 at the rate of 9% simple interest per annum. If he paid an amount of $10626 to clear the loan, then find the time period of the loan.
(3) How much loan did Michelle borrow 5 years ago at a rate of simple interest 5% per annum, if he paid $8687.5 to clear it?
(4) William took a loan of $5000 at the rate of 7% simple interest per annum. If he paid an amount of $7450 to clear the loan, then find the time period of the loan.
(5) Michael had to pay $3597 in order to furnish the loan taken 3 years before. If the rate of simple interest was 3% then find the sum borrowed.
(6) What amount will be due after 2 years if Thomas borrowed a sum of $3400 at a 5% simple interest?
(7) Find the amount to be paid if Jennifer borrowed a sum of $5250 at 10% simple interest for 8 years.
(8) What amount will be due after 2 years if Christopher borrowed a sum of $3500 at a 6% simple interest?
(9) What amount will be due after 2 years if Donald borrowed a sum of $3750 at a 6% simple interest?
(10) In how much time a principal of $3200 will amount to $3520 at a simple interest of 2% per annum?