Formulas:
The factors involved in simple interest are:
A.Principal Amount:
The amount of money which is borrowed or lent out by a person for a certain period.
B.Interest:
The fee charged by a lender or a borrower for the use of borrowed money.
C.Simple Interest:
S.I=$\dfrac{p*n*r}{100}$
Where p=principal amount ,n=number of years ,r=rate of interest.
We can derive some other formulas from S.I=$\dfrac{p*n*r}{100}$
- To find the principal p=$\dfrac{SI*100}{n*r}$
- To find number of years n=$\dfrac{SI*100}{p*r}$
- To find the rate of interest r in %=$\dfrac{SI*100}{p*n}$
- Total amount=Principal +Simple interest
- If sum becomes N times in n years at simple interest ,then the formula for calculating number of years n=$\dfrac{100(N-1)}{r}$
- Amount gets N times increases then simple interest S.I=(N-1)p
Simple Interest Definition:
A Interest is the amount paid by someone who borrows a certain amount of money. This term is commonly used in banks, loans, installments and investments. It is associated with percent, rate and the length of time, for which the amount of money is borrowed.
Factors of Simple Interest:
There are only 3 common factors to be considered with regards to simple interest.
1.Principal
This is the amount of money being borrowed.This could be loaned from a bank or any loaning establishment or borrowed from a person. This will be the basis of how much will be paid with the additional compensation for borrowing.
2.Rate of Interest
This is the percent to be used to calculate the additional amount to be paid along with the principal. Common rates of interest ranges from 1 to 10% but it can also be higher depending on the agreement between the parties.
3.Time
This is the period from the beginning when the money was borrowed to the period that when the money should be returned with the additional amount (interest). This can also be called a term or deadline. This should properly and strictly be observed especially in huge amount of loans.
Solved Examples - Easy:
Q1.Find the simple interest for the sum of Rs.5,000 for 5 years and the rate of interest is 4%.Given: p=Rs.5,000 ,n-5 years ,r=4%
S.I=$\dfrac{p * n * r}{100}$
=$\dfrac{5,000 * 5 * 4}{100}$
=Rs.1,000
Formula:
Total amount=Principal +Simple interest.Solved Examples - Easy:
Q2:The principal amount of Rs.800 became Rs.880 in 2 years and find the rate of interest.Given: p=Rs.800 ,n=2years,Total amount=Rs.880 S.I=Total amount-principal =880-800
=80
Rate of interest r%=$\dfrac{s.i * 100}{p * n}$
r%=$\dfrac{80 * 100}{800 * 2}$
=1/2=5%.
Formula:
If sum becomes N times in n years at simple interest ,then the formula for calculating number of years n=$\dfrac{100(N-1)}{r}$Solved Examples - Easy:
Q3.In how many years the principal will get 3 times increases, if the ROI is 4%?Given,N=3 times r=4%
Number of years =$\dfrac{100(3-1)}{4}$
=$\dfrac{100*2}{4}$
=$\dfrac{200}{4}$
=50 years
Formula:
Amount gets N times increases then simple interest S.I=(N-1)pSolved Examples - Easy:
Q4.If an amount gets doubled in 2 years at simple interest, then in how many years you will get 4 times your amount?Amount gets doubled in 2 years that means SI in 2 years is equal to principal amount.
therefore,SI=p
then p=$\dfrac{p*2*r}{100}$
r=$\dfrac{p*100}{p*2}$
r=50
Now,Amount gets 4 times which means SI=3p
3p=$\dfrac{p*n*50}{100} $
n=$\dfrac{3p*100}{p*50}$
=6 years