Multiplication by 2 Digit Numbers – The Mental Math Approach
October 9, 2022
Compound Interest
October 20, 2022Â About this post
You lend some amount of money to a person for a certain period of time upon the condition that the borrower pays back the amount with certain interest on the amount lent. So, in essence you are collecting a fee from the borrower for the amount you lent. In this topic we will deal with problems of this kind which is primarily concerned with the simple interest on the amount that is originally lent, borrowed or invested.
The first section in this topic is an introduction to Simple Interest with an explanation of the terminologies involved, the formula used to compute Simple Interest. The exercises contain solved question and answers on Simple Interest. When solving exercises, we recommend you to try solving the problems on your own, that way you will understand better and you can define your own approach to solving problems on Simple Interest.
Introduction to Simple Interest
Simple Interest is the extra amount that is paid (or charged) on the amount borrowed (or invested). It is denoted by SI.
SI is generally calculated every year (or every time period) on the original Principal.
Principal: The amount borrowed (or invested) is called the Principal generally denoted by P.
Amount: Denoted by A is the final value of principal with interest.
Rate of interest: Is the annual simple interest rate. Denoted by r.
Interest: Denoted by I. Is the extra amount by which the principal increases.
Time period: Is the time interval for which the money is borrowed (or invested). Denoted by n.
Computing Simple Interest:
SI = $\frac{Pnr}{100}$
Final Amount = P + SI
Important Points:
- The Simple Interest earned every year is constant.
- The principal is same at the beginning of every year.
