How do you Calculate Simple Interest?
Interest: Interest is the amount paid in lieu of using some money which is not owned by us.
- The amount of money deposited, lent or borrowed is called principal (P).
- The additional money given at the end of a period for using the principal is called interest.
- The total money we receive or pay is called the amount due at that time. Thus the sum of principal and interest is called amount.
i.e. amount = principal + interest
- The time for which the money is kept in the bank or for which the loan has been borrowed is called the time period.
To find the simple interest on a certain amount of money we need to know three quantities.
(i) Amount deposited or borrowed is called principal (P)
(ii) Rate of interest (R)
(iii) Time period (T)
Note: If the rate of interest is given per annum then the time period must be expressed in terms of year.
For Example Time period
Simple Interest Problems with Solutions
1. Find the simple interest when; Principal = ₹ 600, Rate = 2% per annum and Time = 20 months.
We have, P = Principal = ₹ 600, R = Rate percent per annum = 2%
And T = Time = 20 months = year
Therefore, simple interest (S.I.)
Thus S.I. = ₹ 20.
2. Find the principal when Simple Interest = ₹ 72, Rate = 3% per annum and Time = 3 months.
3. Find the rate when Principal = ₹ 700, Simple Interest = ₹ 168 and Time = 16 months.
4. Find the time when principal = ₹ 640, Rate =12½ % per annum and Simple Interest = ₹ 40.
5. Neeraj borrowed a sum of money at 10½ % per annum from a bank. If he paid ₹ 1863.75 as interest for 2½ years, find the sum.
Hence, the required sum = ₹ 7100
6. A sum of money becomes of itself in 6 years at a certain rate of interest. Find the rate of interest.
7. If Meena gives an interest of ₹ 45 for one year at 9% rate p.a., what is the sum she has borrowed?
8. What rate gives ₹ 280 as interest on a sum of ₹ 56,000 in 2 years ?
9. Find the amount to be paid at the end of 3 years in each case :
(i) Principal = ₹ 1200 at 12% p.a.
(ii) Principal = ₹ 7500 at 5% p.a.