Question

Selvam said that her sister took a loan from the bank to do her higher studies. The loan money that she borrowed from the bank is known as sum or principal. The borrower particular period of time, the borrower has to pay an additional amount to the bank. This is known as Interest. So to repay the money borrowed, the has to add?

I need with full explanation.​

Answer 1

That is amount = Principal+Interest

Interest is generally given in per cent for a period of 1 year per annum. Suppose the bank gives an amount of ₹100 at an interest rate of ₹8, it is written as 8% per year or per annum or in short 8% p.a. (per annum).

It means on every ₹100 borrowed,₹8 is the required interest, to be paid for every one year. To understand this let us consider an example.

Selvam takes a loan of ₹10000 at 15% per year as rate of interest.

Let us find the interest he has to pay at the end of 1 year.

Sum borrowed = ₹10000

Rate of interest = 15% per year

This means if ₹100 is borrowed he has to pay ₹15 as interest.

So, for the borrowed amount of ₹10000, the interest for one year would be

$\sf \frac{15}{100} \times 10000 = rs1500$

So at the end of 1 year, he has to give an amount of

$\bf= 10000 + 1500 = 11500.$

Now we can write a general relation to find interest for one year. Take P as the principal or sum and r% as rate per cent per annum. On every ₹100 borrowed the interest paid is ₹r. Therefore, on ₹P borrowed the interest for 1 year

$\sf{would \: be} \: \frac{p \times r}{100} .$

If the amount is borrowed for more than 1 year the the interest is calculated for the total period is during which the money kept. This way of calculating interest for the total time of period for the same principal is known as simple interest.

We know that on a principal of ₹P at r% rate of interest per year, the interest paid for 1 year is

$\frac{p \times n \times r}{100} \: or \: \frac{pnr}{100}$

The amount we have to pay at the end of 'n' years is A= P+I.