Simple Interest
Simple Interest(S.I) : It is the interest is calculated uniformly on the original principal throughout the loan period .When we need a large sum of money for buying house, car etc. We borrow money either by bank or by some agency . The money borrowed is called loan and we become borrower
When we borrow money in the from of loan that money we have to return in a specified period of time by giving them extra fees. This extra fees is called Interest (S.I)
Some Definitions :
Principal : Money borrowed.
Rate: is the percentage of the principal charged as interest each year. The rate is expressed as a decimal fraction, so percentages must be divided by 100.
Example : 5% = 5/100 = 0.05
Amount : The total money which the borrower pays back to the lender at the end of the specified period is called the amount.
Time : Time in years of the loan.
The simple-interest formula is often abbreviated in this form:
Interest = P x R x T |
If the time is given in month then divide the given formula by 12.
Interest = ( P x R x T ) / 12
If the time is given in days then divide the given formula by 365.
Interest = ( P x R x T ) / 365
Amount (A) = Principal (P) + Interest (S.I) |
The following simple-interest calculator will help you determine how much interest you can earn when investing your money with a company.It is the interest is calculated uniformly on the original principal throughout the loan period . The loan period may be in years,months or in days.
Example :
1) Anita borrowed $800 for 2 years at the rate of 12% per annum. Find the interest.Also find the amount paid by her.
Solution :
Principal = ’P’ = $800, Rate = R = 12% = 0.12 , Time = 'T' = 2 years.
Interest : I = P x R x T I = 800 x 0.12 x 2 I = 192 Interest = $192 Amount: A = P + I A = 800 + 192 Amount = $992 |
Simple Interest (S.I)
• Finding rate when Principal and time are given
• Finding time when Principal and rate are given
• Solved examples on Simple-Interest