Question

What is simple interest ? Plz explain with some examples

Answer 1

Answer:

Simple Interest (S.I.) is the method of calculating the interest amount for a particular principal amount of money at some rate of interest. For example, when a person takes a loan of Rs. 5000, at a rate of 10 p.a. for two years, the person's interest for two years will S.I. on the borrowed money.

Answer 2

Answer:

Simple Interest is an easy method of calculating the interest for a loan/principal amount. Simple interest is a concept which is used in most of the sectors such as banking, finance, automobile, and so on. when you make a payment for a loan, first it goes to the monthly interest and the remaining goes towards the principal amount. In this article, let us discuss the definition, simple interest formula.

Step-by-step explanation:

Simple Interest Formula⤵️

The Formula for simple interest helps you find the interest amount if the principal amount, rate of interest and time periods are given.

✔️Simple interest formula is given as:

SI = (P × R ×T) / 100

✔️Where SI = simple interest

P = principal

P = principalR = interest rate (in percentage)

P = principalR = interest rate (in percentage)T = time duration (in years)

✔️In order to calculate the total amount, the following formula is used:

Amount (A) = Principal (P) + Interest (I)

✔️Where,

Amount (A) is the total money paid back at the end of the time period for which it was borrowed.

Simple Interest Examples⤵️

Example 1:

✔️Rishav takes a loan of Rs 10000 from a bank for a period of 1 year. The rate of interest is 10% per annum. Find the interest and the amount he has to the pay at the end of a year.

⏩Solution:

Here, the loan sum = P = Rs 10000

Rate of interest per year = R = 10%

Time for which it is borrowed = T = 1 year

Thus, simple interest for a year, SI = (P × R ×T) / 100 = (1000× 100 ×1) / 100 = Rs 1000

Amount that Rishav has to pay to the bank at the end of the year = Principal + Interest = 10000 + 1000 = Rs 11,000

Example 2:

✔️Namita borrowed Rs 50,000 for 3 years at the rate of 3.5% per annum. Find the interest accumulated at the end of 3 years.

⏩Solution:

P = Rs 50,000

R = 3.5%

T = 3 years

SI = (P × R ×T) / 100 = (50,000× 3.5 ×3) / 100 = Rs 5250

✔️Example 3:

Example 3:Mohit pays Rs 9000 as an amount on the sum of Rs 7000 that he had borrowed for 2 years. Find the rate of interest.

⏩Solution:

A = Rs 9000

P = Rs 7000

SI = A – P = 9000 – 7000 = Rs 2000

T = 2 years

R = ?

SI = (P × R ×T) / 100

R = (SI × 100) /(P× T)

R = (2000 × 100 /7000 × 2) =14.29 %

Thus, R = 14.29%

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