## How do you Calculate Simple Interest?

### 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.

**Solution:**

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.

**Solution:**

**3.** Find the rate when Principal = ₹ 700, Simple Interest = ₹ 168 and Time = 16 months.

**Solution:**

**4.** Find the time when principal = ₹ 640, Rate =12½ % per annum and Simple Interest = ₹ 40.

**Solution:**

**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.

**Solution:**

Hence, the required sum = ₹ 7100

**6.** A sum of money becomes \(\frac { 7 }{ 4 }\) of itself in 6 years at a certain rate of interest. Find the rate of interest.

**Solution:**

**7.** If Meena gives an interest of ₹ 45 for one year at 9% rate p.a., what is the sum she has borrowed?

**Solution:**

**8.** What rate gives ₹ 280 as interest on a sum of ₹ 56,000 in 2 years ?

**Solution:**

**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.

**Solution:**