Simple Interest:
Interest is defined as money charged for borrowing the money from someone/banks.
There are four words mainly used in this category.
1)Principal:
It is denoted by 'P'. Principal is the amount of money borrowed for a certain time.
2)Rate of interest:
3)Amount:
It is denoted by 'A'. The sum of principal and interest is called amount.
4)Time:
It is denoted by 'T'. It is the period for which we borrowed money is called time.
Simple Interest:
Simple interest is denoted by 'SI'. If the interest is calculated on the amount which we borrowed at any rate of interest for any period of time is called simple interest.
Basic Formulas:
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1) simple interest= (P*R*T)/100
2)P= 100*SI/R*T
R= 100*SI/P*T
T= 100*SI/P*R
3)Amount= principal + simple interest
Examples:
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1) Find the simple intesrest on Rs.68000 at [16*(2/3)]% per annum for 9 months?
sol: Principal = Rs.68000
--- Rate = (50/3)%
time = (9/12) years = (3/4) years
Simple interest = (P*T*R)/100
= [(68000* (50/3)* (3/4))/100]
= [(68000* 50* 3)/ (50*4*100)]
= Rs.8500
2) What would be the simple interest obtained on an amount of Rs.9850 at the rate of
7 p.c.per annum after 6 years?
sol: Principal = Rs. 9850
---- SI = (P*T*R)/100
= (9850*7*6)/100
= Rs. 4137
3) A man took loan from a bank at the rate of 8% per annum. simple interest. After 4 years he had to pay Rs.6200 interest only for the period. Find the principal amount borrowed by him?
sol: Time = 4years
--- simple interest = Rs.6200
Rate = 8%
Principal = 100*SI/R*T
= (100 * 6200)/(8 * 4)
= Rs.19375
4) Sahil took a loan for 6 years at the rate of 5% per annum on simple interest. If the total interest paid was Rs. 1230. Find the principal?
sol: P = 100*SI/R*T
--- P = (100 * 1230)/(6*5)
= 4100
5) If the simple interest on Rs.1120 for 2 years is Rs.8000,what is the rate of interest percent per annum?
sol: interest = Rs.1120
---- time = 2 years
principal = Rs.8000
R= (100*SI)/(P*T)
= (100 * 1120)/(8000 * 2)
= 56/8
Rate = 7%
6) A four years NSC certificate was purchased for Rs. 500 with Rs.1000 being the maturity value. Find the rate of simple interest?
sol: principal = Rs.500
---- simple interest = Rs.500
time = 4years
R= (100*SI)/(P*T)
= (100 * 500)/(500 * 4)
= 100/4
R= 25%
7) How much time will it take for an amount of Rs.900 to yield Rs.81 as interest at 4.5% per annum of simple interest?
sol: principal = Rs.900
---- simple interest = Rs.81
rate = 4.5%
T= (100*SI)/(P*R)
= (100 * 81)/(900 * 4.5)
= 8100/4050
= 2 years
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