Simple Interest : Simple Interest Concepts, Tricks & Formulaes

Simple Interest

Simple Interest is a quick method of calculating the interest charge on a loan. Simple interest is determined by multiplying the interest rate by the principal by the number of periods.

Simple Interest Formulaes

Interest = Principal × Rate  ×  Timesimple interest, S.I, principal, rate, time

I = P X R X T
where:

‘ I ‘ is the total amount of interest paid,

‘ P ‘ is the amount lent or borrowed,

‘R’ is the percentage of the principal charged as interest each year. The rate is expressed as a decimal fraction, so percentages must be divided by 100. For example, if the rate is 15%, then use 15/100 or 0.15 in the formula.

‘ T ‘ is the time in years

→ To find principal (P) P = I/rt

→ To find the interest rate (r) r = I/Pt

→ To find the period of time (t) t = I/Pr

♥ therefore, the formula for calculating the simple interest is

Simple Interest

→  Principal (P) = Amount (A) – Interest (I)

Simple Interest Problems

Problem 1: Find the simple interest on Rs 7000 at 50/3 % for 9 months

Answer with Explanation :

Simple Interest Problem

 

Problem 2: Sam invested a certain amount of money and got back an amount of $ 8400 in a bank. If the bank paid an interest of $ 700, find the amount Sam invested.

Solution with Explanation: Amount (A) = $ 8400,

Simple Interest (SI) = $ 700

Principal (P) = Amount (A) – Interest (I)

= 8400 – 700

= 7700

Therefore, Sam invested $ 7700.

 

Problem 3: Mr. Thomas invested an amount of Rs. 13,900 divided in two different schemes A and B at the simple interest rate of 14% p.a. and 11% p.a. respectively. If the total amount of simple interest earned in 2 years be Rs. 3508, what was the amount invested in Scheme B?

a) Rs. 6400

b) Rs. 7200

c) Rs. 6500

d) Rs. 7500

Solution with Explanation:

simple interest (2)Therefore the Right Answer will be  a) Rs. 6400

 

Problem 4: How much time will it take for an amount of Rs. 900 to yield Rs. 81 as interest at 4.5% per annum of simple interest?

a) 2 years

b) 3 years

c) 1 year

d) 4 years

Solution with Explanation:

simple interest problem (2)

 

Problem 5: A sum of Rs. 14,000 amounts to Rs. 22,400 in 12 years at the rate of simple interest. What is the rate of interest?

a) 7%

b) 6%

c) 5%

d) 4%

Solution with Explanation:

simple interest questionTherefore, the Interest Rate or Rate of Interest will be 5%.

To Learn more on Simple Interest and its Problems watch the Video Below

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