unit -2 simple interest

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                     Simple Interest:

Definition[Simple Interest]

Simple interest is based on the principal 

amount of a loan or deposit.

Symbols Used:

P- Principal or Present value.

A- Amount or value at the end

n- Number of units of time and n is either an 

integer or a fraction. 

r- Rate of Interest 

I- Simple Interest

CI-Compound Interest.

Simplex Interest- Formulae:

(i) I= 𝑃𝑛𝑟/100

(ii) A=P+I = P+ 𝑃𝑛𝑟/100= 𝑃(1 +𝑛𝑟100)

(iii) P= 100/nr

(iv) n=100/𝑃𝑟

(v) r=100/𝑃𝑛

Note: n is either an integer or a fraction.

Example:1 Find the simple interest on the sum

of Rs. 6,000 at 10% p.a. for 3 years.

Solution:

Given P= 6,000; r=10; n=3.

To find simple interest(I)

Formula, I= 𝑃𝑛𝑟/100

I=6000𝑋3𝑋10/100

I=180000/100

I=1800.

Example: 2

Calculate the total amount that will be

received from the debtor when the principal Rs.10,000 is lent to him on interest for 4 years at 9%p.a.

Solution:

Given P=10,000; n=4; r=9

To find Total Amount(A)

Formula, A=P+I = P+ 𝑃𝑛𝑟/100= 𝑃(1+𝑛𝑟/100)

= 10,000( 1 +4𝑋9÷100)

=10,000(1+0.36)

=10,000(1.36)

=13,600

Example:3

Rs. 6,000 amounts to Rs. 8940 at 14% p.a

interest. Find the number of years for which theamount was lent

.

Solution:

Given P=6,000; A=8940; r=14

To find n

Formula, n=100𝐼𝑃𝑟

Where, I=A-P=8940-6000=2940.

n=100𝐼/𝑃𝑟

=100𝑋2940÷6000𝑋 14

=2940÷840

= 3.5 yeaes.

Example:4

If a term deposit of Rs. 4,000 earns an interest of Rs. 2500 in months, find the rate of interest.

Solution:

Given P=4,000; I= 2,500; n=50/12 years.

Formula, r=100𝐼𝑃𝑛

r =100𝑋2500÷4000𝑋50÷12

r =100𝑋2500𝑋12÷4000𝑋50

r = 15%

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                                               s.Dinesh karthi

                                                23ucm006

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