Simple interest

Simple interest

2. Simple Interest:

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.

i.e I = p × n × r

where p is the loan amount

r is the interest rate

n is the duration of the loan


Example-1
Find the simple interest on Rs.6500 for 04 years at 6% per
annum.

Solution:
P = 6500

n = 4
r = 6% = 6
= 0.06
100
I = ?

We know that

I = P x n x r

I = 6500 x 4 x 0.06

I = Rs.1560

3. Example-2

Find the time in which Rs.6500 will earn Rs.1560 at 6%
per annum.

Solution:

P = 6500

r = 6% = 6
= 0.06
100

I = 1560

n = ?

We know that

I = P x n x r

n =
I 1560
=
p r 6500 0.06

n = 4 years

4. Example-3

If Rs.6500 increases by Rs.1560 in 04 years, find the rate
of interest per annum.

Solution:

P = 6500

I = 1560

n = 4

r = ?

We know that

I = p x n x r
r =
I
pn

r =
1560



r = 0.06

r = 6%

5. Exampl-4

Find the principal which earns Rs.1560 in 4 years at 6%
per annum.

Solution:

r = 6% = 6
= 0.06
100

I = 1560

n = 4

P = ?

We know that

I = P x n x r
p =
I
nr

p =
1560



P = Rs.6500

6. Example-5

Find the amount of Rs.6500 in 04 years at 6% per annum.

Solution:

r = 6% = 6
= 0.06
100

P = 6500

n = 4

A = ?

We know that

A = P (1 + n r)

A = 6500{1+4(0.06)}

A = 6500(1.24)

A = Rs.8060

7. Example-6

In what time will Rs.6500 amount to Rs.8060 at 6% per
annum.

Solution:

A = Rs.8060
r = 6% = 6
= 0.06
100

P = Rs.6500

n = ?

We know that

I = A – P

I = 8060 – 6500

I = Rs.1560

Now
n =
I 1560
=
p r 6500 0.06

n = 04 years