1. Simple interest & compound
interest
By
Bharath kumar vemaluri
Assoc.prof for aptitude
Kavali.
2. Simple interest:
The money paid by the borrower to the lender
for the use of money lent is called ‘INTEREST’.
The sum lent is called ‘PRINCIPLE’
Simple interest S.I. = (PxNxR)/100
P = Principle
N = Number of years
R = Rate % p.a,
Amount = Principal + S.I
3. Examples:
Find the simple interest on Rs. 11,000 for 5 years at 8%
p.a. ?
Sol: S.I. = (11000X5X8)/100 =4400
Satish borrowed Rs. 5,000 from a bank at 18% p.a.
find the amount to be paid by him after 2 years 6
months ?
Sol: S.I = 5000 x 5/2 X18/100 =2250
Amount = P + S.I. = 5,000 + 2,250
= Rs. 7,250
4. Mr. Govind lent Rs. 1800 to Mr. Khan for 3 years and Rs. 3300 to
Mr. Mukund for 2 years and he received Rs. 480 as simple interest in
all. What is the rate of interest per annum?
Sol: S.I. obtained by Mr. Govind
= (1800X3XR)/100 + (3300X2XR)/100
= 54 R + 66 R = 120 R = Rs. 480
R = 4% p.a.
A certain sum of money is invested by Mr. Gopal at 7% p.a. after 4
years. However he would get Rs. 520 more simple interest, if he
invest the same sum a t6% p.a. for 9 years. What is the sum?
Sol: The difference between S.I. obtained in two cases is Rs.520
( PX9X6)/100 – (PX4X7)/100= 520
54P-28P=52000
26P=52000
p=52000/26 = 2000
5. In how many years will a sum of money become five
times at 20% p.a. simple interest?
Sol: Here Amount = 5P…………….(A=P+4P=5P)
S.I. = 4P
4P = (PXNX20)/100
=> N = 20 years
6. Note:
in S.I the interest remains constant or is same for
every year.
in S.I the interest percentages over the year can
be added.
in C.I the interest percentages over the years are
to be multiplied individually.
7. Compound interest:
Calculate the C.I 0n 10000 at 20% per annum
after 2 years. The interest being compounded
annually?
soln: p=10000
T=2 years
R%=20%
amount=10000X1.2X1.2=12400
C.I=12400-10000 = 2400
8. Calculate the C.I on 10000 at 10% per annum after 1.5
years the interest being compounded halfyearly?
Soln:
p= 10000
T=1.5 years (6 months+ 6 months+ 6 months)
R%=10% ,so for six months 5%
Amount= 10000X1.05x1.05X1.05=11576.25
C.I= amount-principle=11576.25-10000=1576.25.
Arun deposited 8000 in HDFC bank which pays him 12%
per annum for 12 months . the interest being
compounded quarterly . find the amount?
Soln: principle=8000
Time =1 year (3m+3m+3m+3m) quarter= 3 months.
rate= 12% ,so 3% for every quarter
amount= 8000X1.03X1.03X1.03X1.03 =9004.07
9. The difference between C.I & S.I on a certain sum of
money after 3 years,20% per annum is 2560. find the sum?
soln: p= y
T= 3 years
R=20%
Difference between c.i and s.i is 2560,
1.2X1.2X1.2X Y – 1.6 y=2560
1.728y-1.6y=2560
0.128y= 2560
y=20000/-(sum)
10. A sum of money becomes 4 times in 10 years . in how many years
will it become 64 times on C.I?
soln: *4 *4 *4
X…………………..4X……………………16X…………………..64X
10 yrs 10 yrs 10 yrs
so 30 years.
