Question:
Calculate the amount due after 10 years if James borrowed a sum of $5000 at a rate of 8% simple interest.
Correct Answer
$9000
Solution And Explanation
Solution
Given,
Principal (P) = $5000
Rate of Simple Interest (SI) = 8%
Time (t) = 10 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% × 10
= $5000 ×8/100 × 10
= 5000 × 8 × 10/100
= 40000 × 10/100
= 400000/100
= $4000
Thus, Simple Interest = $4000
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 + $4000
= $9000
Thus, Amount to be paid = $9000 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) = 10 years
Thus, Amount (A)
= $5000 + ($5000 × 8% × 10)
= $5000 + ($5000 ×8/100 × 10)
= $5000 + (5000 × 8 × 10/100)
= $5000 + (40000 × 10/100)
= $5000 + (400000/100)
= $5000 + $4000 = $9000
Thus, Amount (A) to be paid = $9000 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 10 years
= Simple interest for 1 year × 10
= $400 × 10 = $4000
Thus, Simple Interest (SI) = $4000
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $5000 + $4000
= $9000
Thus, Amount to be paid = $9000 Answer
Similar Questions
(1) Thomas took a loan of $5600 at the rate of 8% simple interest per annum. If he paid an amount of $9184 to clear the loan, then find the time period of the loan.
(2) Mark took a loan of $6800 at the rate of 9% simple interest per annum. If he paid an amount of $12308 to clear the loan, then find the time period of the loan.
(3) Calculate the amount due after 9 years if Patricia borrowed a sum of $5150 at a rate of 4% simple interest.
(4) Margaret took a loan of $6700 at the rate of 10% simple interest per annum. If he paid an amount of $12730 to clear the loan, then find the time period of the loan.
(5) Calculate the amount due if Susan borrowed a sum of $3650 at 10% simple interest for 3 years.
(6) Calculate the amount due after 10 years if Charles borrowed a sum of $5900 at a rate of 6% simple interest.
(7) Jennifer took a loan of $4500 at the rate of 9% simple interest per annum. If he paid an amount of $6930 to clear the loan, then find the time period of the loan.
(8) Calculate the amount due after 9 years if David borrowed a sum of $5400 at a rate of 5% simple interest.
(9) Calculate the amount due after 9 years if Jessica borrowed a sum of $5750 at a rate of 8% simple interest.
(10) If Nancy paid $4648 to settle his loan which he had taken 4 years before at a simple interest of 3%, then find the loan taken.