Question:
Calculate the amount due after 10 years if Karen borrowed a sum of $5950 at a rate of 8% simple interest.
Correct Answer
$10710
Solution And Explanation
Solution
Given,
Principal (P) = $5950
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) = $5950 × 8% × 10
= $5950 ×8/100 × 10
= 5950 × 8 × 10/100
= 47600 × 10/100
= 476000/100
= $4760
Thus, Simple Interest = $4760
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 = $5950 + $4760
= $10710
Thus, Amount to be paid = $10710 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 = $5950
Rate of Simple Interest (SI) or (R) = 8%
And, Time (t) = 10 years
Thus, Amount (A)
= $5950 + ($5950 × 8% × 10)
= $5950 + ($5950 ×8/100 × 10)
= $5950 + (5950 × 8 × 10/100)
= $5950 + (47600 × 10/100)
= $5950 + (476000/100)
= $5950 + $4760 = $10710
Thus, Amount (A) to be paid = $10710 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 $5950, the simple interest in 1 year
= 8/100 × 5950
= 8 × 5950/100
= 47600/100 = $476
Thus, simple interest for 1 year = $476
Therefore, simple interest for 10 years
= Simple interest for 1 year × 10
= $476 × 10 = $4760
Thus, Simple Interest (SI) = $4760
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $5950 + $4760
= $10710
Thus, Amount to be paid = $10710 Answer
Similar Questions
(1) Calculate the amount due if William borrowed a sum of $3500 at 6% simple interest for 4 years.
(2) If Elizabeth borrowed $3450 from a bank at a rate of 3% simple interest per annum then find the amount to be paid after 2 years.
(3) Matthew took a loan of $6400 at the rate of 8% simple interest per annum. If he paid an amount of $11008 to clear the loan, then find the time period of the loan.
(4) What amount does Sarah have to pay after 6 years if he takes a loan of $3850 at 8% simple interest?
(5) Find the amount to be paid if Mary borrowed a sum of $5050 at 2% simple interest for 7 years.
(6) Calculate the amount due if William borrowed a sum of $3500 at 7% simple interest for 3 years.
(7) William had to pay $4025 in order to furnish the loan taken 3 years before. If the rate of simple interest was 5% then find the sum borrowed.
(8) What amount will be due after 2 years if Joshua borrowed a sum of $3950 at a 4% simple interest?
(9) How much loan did Donald borrow 5 years ago at a rate of simple interest 3% per annum, if he paid $7475 to clear it?
(10) Calculate the amount due if Susan borrowed a sum of $3650 at 2% simple interest for 3 years.