SIMPLE INTEREST

SIMPLE INTEREST

Simple interest is calculated as a fixed percentage of amount borrowed or lent at the start.

It is paid or received at the end of the contracted period

Formula

Interest = Principal x Rate x Time

Where :

P= Principal

R=Interest rate per annum in percentage

Time= No of years

Interest = Interest after t years

I= P x rt

Accumulated Amount (A) = P+I

A = P(1+rt)

Question 1

Ram purchases a TV by obtaining a loan on simple interest. It costs Rs 15,000 and the interest rate on the loan is 12% per annum (simple). He has to repay the loan after two years. Calculate the total interest to be paid and the accumulated amount?

DATA
Principal	15,000
Rate	0.12
Time	2 years

I = PRT

  = 15,000 * 0.12*2

  = 3,600

A= P+I

  = 15,000 + 3,600

  = 18,600

 Question 2

Ravi invested Rs 50,000 in Fixed deposit with interest rate of 7.5%. How much interest would he earn after 2 years?

DATA
Principal	50,000
Rate	0.075
Time	2 years

I = PRT

  = 50,000*0.075*2

  = 7,500

Question 3

Hari has a savings account with interest rate 4% in a bank. If he deposits 5,000 to the savings account how much money will he have after 5 years?

A=P*(1+rt)

  = 5,000*[1+(.04)*(5)]

  = 5,000*[1+0.2]

  = 5,000*1.2

  = 6,000