SIMPLE INTEREST

SIMPLE INTEREST  OR  S.I. :-

IMPORTANT DEFINITIONS :-

1.   The amount of money that is initially borrowed is called principal or sum or capital.
2.   The money paid by the borrower to the lender for the use of money lent is called interest.
3.   The sum of principal and interest is called amount.
        amount = principal + interest
4.   The period for which money is deposited or borrowed is called time.

       NOTE:- If the time is given in days then, the day on which money is deposited is not counted while the day on which money is withdrawn is counted.

5.   If interest is calculated on the principal for any length of time is called SIMPLE INTEREST or S.I.

          S.I. = $\left (\frac{P\times R\times T}{100}\right )$

           Here,   P -  principal
                      R - rate % per annum
                      T - time

TO FIND PRINCIPAL :-

          P = $\left (\frac{100\times S.I.}{R\times T}\right )$

TO FIND RATE % :-

          R = $\left (\frac{100\times S.I.}{P\times T}\right )$

TO FIND TIME :-

          T = $\left (\frac{100\times S.I.}{P\times R}\right )$

Example 1. :-  Find S.I. on Rs 5400 at 8% per annum for 12 months?
            Sol.    Given     P = Rs 5400
                                   R = 8% p.a.
                                   T = 1 year

              $\therefore$    S.I. = $\frac{P\times R\times T}{100}$

                            = $\frac{5400\times 8\times 1}{100}$
                                          
                            = Rs 432


Example 2. :-  At what percent per annum will a sum of money double in 16 years?
           Sol.     Let,  principal be  Rs 100
                      After 16 years it becomes Rs 200
        $\therefore$  Interest = 200 - 100
                        = 100

            Then,  R = $\frac{100\times S.I.}{P\times T}$

                           = $\frac{100\times 100}{100\times 16}$

                           = $6\frac{1}{4} \%$