Calculation of Simple Interest, introduction, formula and solved examples

1. Simple Interest
Std: VII
Date: 24th September, 2014
-Anju Soman/ 90
H.G.M. Azam College of Education
(2014-2015)

2. 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

3. Formula :
• S.I = P x R x N
100
Where, S.I = Simple Interest
P= Principal
R= Rate of Interest
N= no. of years

4. 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

5. 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

6. Example: 3
If 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

7. 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.