Principal – The money which is borrowed or lent for a certain period of time is called Principal or the Sum.
Interest – The extra money which is paid along with the principal.
Amount = Principal + Interest
Simple Interest – If the interest is reckoned uniformly then it is called Simple Interest.
Let say;
P = Principal
R = Rate % per annum
T = Time in years, Then-
SI = [(P × R × T)/100]
Examples
Q-1. Find the Simple Interest on Rs. 1000 at 10% per annum for a period of 2 years?
Solution
Given-
P = 1000, R = 10%, T = 2 years
SI = P × R × T/100
SI = (1000 × 10 × 2)/100 = Rs. 200
So, the Simple Interest on Rs. 1000 will be 200 after 2 years.
Q-2. At what rate percent per annum will a sum of money is doubled in 16 years? (RRB 2003)
Solution –
Let the Principal = P
Amount = 2P (Since it is doubled)
So, Interest = Amount (A)- Principal (P)
= 2P – P = P
Now,
SI = P × R × T/100
P = (P × R × 16)/100
After rearranging the Equation we get,
R = [(100 × P)/(P × 16)] = 25/4 % per annum.
Q-3 Let Mohan deposits Rs. 25000 in the bank. The bank gives an interest rate of 10% p.a. How much he will receive after 5 years 6 months.
Sol- P= Rs. 25000, R = 10% p.a. T = 5 years 6 months = 5(6/12) = 11/2 years
Interest = P × R × T/100
= (25000 × 10 × 11/2)/100 = Rs. 13750
So, the Amount Received will be = P + SI = Rs. (25000 + 13750) = Rs. 38750