Question:
Find the amount to be paid if Michael borrowed a sum of $5300 at 8% simple interest for 8 years.
Correct Answer
$8692
Solution And Explanation
Solution
Given,
Principal (P) = $5300
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) = $5300 × 8% × 8
= $5300 ×8/100 × 8
= 5300 × 8 × 8/100
= 42400 × 8/100
= 339200/100
= $3392
Thus, Simple Interest = $3392
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 = $5300 + $3392
= $8692
Thus, Amount to be paid = $8692 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 = $5300
Rate of Simple Interest (SI) or (R) = 8%
And, Time (t) = 8 years
Thus, Amount (A)
= $5300 + ($5300 × 8% × 8)
= $5300 + ($5300 ×8/100 × 8)
= $5300 + (5300 × 8 × 8/100)
= $5300 + (42400 × 8/100)
= $5300 + (339200/100)
= $5300 + $3392 = $8692
Thus, Amount (A) to be paid = $8692 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 $5300, the simple interest in 1 year
= 8/100 × 5300
= 8 × 5300/100
= 42400/100 = $424
Thus, simple interest for 1 year = $424
Therefore, simple interest for 8 years
= Simple interest for 1 year × 8
= $424 × 8 = $3392
Thus, Simple Interest (SI) = $3392
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $5300 + $3392
= $8692
Thus, Amount to be paid = $8692 Answer
Similar Questions
(1) Charles took a loan of $5800 at the rate of 6% simple interest per annum. If he paid an amount of $7888 to clear the loan, then find the time period of the loan.
(2) Calculate the amount due if John borrowed a sum of $3200 at 5% simple interest for 4 years.
(3) Donald took a loan of $7000 at the rate of 10% simple interest per annum. If he paid an amount of $11900 to clear the loan, then find the time period of the loan.
(4) Calculate the amount due if James borrowed a sum of $3000 at 5% simple interest for 3 years.
(5) If Linda paid $3886 to settle his loan which he had taken 4 years before at a simple interest of 4%, then find the loan taken.
(6) What amount will be due after 2 years if James borrowed a sum of $3000 at a 8% simple interest?
(7) Steven had to pay $5014 in order to furnish the loan taken 3 years before. If the rate of simple interest was 3% then find the sum borrowed.
(8) Calculate the amount due if Elizabeth borrowed a sum of $3450 at 6% simple interest for 4 years.
(9) What amount does Christopher have to pay after 5 years if he takes a loan of $4000 at 9% simple interest?
(10) Calculate the amount due if Thomas borrowed a sum of $3800 at 6% simple interest for 3 years.