Simple Interest

Simple Interest:

We would have all come across the term "Interest" Interest in a lay mans language would mean to develop a liking,example:Ones Interest in collecting paintings,but in mathematics Simple interest = (pnr)/100.Let me explain this Concept Of Simple Interest more accurately:


Simple interest = (pnr)/100

Compound interest = p (1 + (r/100) n

Where,

p – Principal

n – Number of years

r – Rate of interest per annum.

The amount borrowed is called Principal. What we pay back to the money lender for using his money for a definite period is called interest or simple interest. The interest paid keeping Rs 100 for one year is called rate percent of interest. The sum of Principal and interest is known as Amount. Simple interest is generally written as interest only. So also unless it is clearly mentioned otherwise the rate of interest means Annual rate.As we have seen in the previous Blogs we get a better understanding of a topic when we solve few example problems,let us now look at few example problems on Simple Interest.



If the interest is calculated for the entire period separately for the principal the interest is called simple interest.

1. Find the simple Interest on a sum of Rs. 800 for 2.5 years at 4.5% per annum.

Solution:

Principal (p) = Rs. 800

Time (n) = 2.5 years

Rate (r %) = 4.5% per annum

Simple interest = (p x n x r)/100


= (800 x 2 .5 x 4 .5) /100

= Rs 90

Simple interest = Rs 90

2. John invested Rs. 5.000 for 3 years at the rate of 6 % per annum. Find the simple interest and the amount received by him at the end of 3 years.

Solution:

Here Principal. p = Rs.5000

Number of years, n = 3

Rate of interest, r = 6 %

Simple interest, I = (p x n x r)/100

=5000x 3 x (6/100)

= Rs. 900

Amount, A = Principal + Interest

= $5000 + 900

= Rs. 5900

The simple interest = Rs .900

Amount = Rs.5, 900


Hope you like the above example of Simple Interest.Please leave your comments, if you have any doubts.