Simple Interest

Std: VIIDate: 24th September, 2014

-Anju Soman/ 90 H.G.M. Azam College of Education (2014-2015)

Meaning:Interest is the amount paid on the principal amount.

Interest computed only on the principal and not on principal plus interest earned or incurred in the previous period(s). Simple interest is used commonly in variable rate consumer lending and in mortgage loans where a borrower pays interest only on funds used

Formula :•S.I = P x R x N 100

Where, S.I = Simple Interest P= Principal R= Rate of Interest N= no. of years

Example: 1 P= 10,000 R= 11% N= 5 yrs S.I. = ?

• Sol: S.I = P x R x N 100 S.I = 10,000 x 11 x 5 100 S.I = rs. 5,500

Example: 2

If principal is rs. 8,000, period is 5 yrs and rate is 7% p.a. find simple interest.

•Sol: S.I = P x R x N 100

S.I = 8,000 X 7 X 5 100

S.I = rs. 2,800

Example: 3If principal is rs. 5,000, period is 4 yrs and simple

interest is rs 1600, what is the rate of simple interest?

• Sol: S.I = P x R x N 100 1600 = 5,000 x R x 4 100 1600= 20,000 x R 100 1600= 200 x R so, R = 1600 200 R = 8yrs

Homework: •Q:1 Rajini deposited Rs. 13,000 in a bank

at the rate of 9% p.a. . She collected rs.

1170 as interest at the end of the period. For

how many years had she deposited the

money?

•Q:2 Principal=? If N= 5/2 yrs , R= 10% p.a. and

I= rs 10,250.