What is simple interest?

Simple interest (S.I.) is a way to calculate the interest amount for a given principal amount of money.

Simple Interest Formula :

If you know the principal amount, interest rate, and time periods, you can use the simple interest formula to calculate the interest amount.

$$SI =\frac{P.T.R}{100}$$

The simple interest formula is stated as follows:

SI denotes simple interest.

P denotes principle.

R denotes interest rate (percentage)

T denotes  time period (years)

To compute the total amount, use the following formula: Amount (A) = Principal (P) + Interest (I).

Where,
Amount (A) is the total amount of money repaid at the end of the borrowing period.

For simple interest, the total amount formula can be stated as:

A = P(1 + RT)
Here,

A = The total amount after the given period.

P = principal amount or initially loan amount.

R = interest rate (per annum)

T = Time (years)

$$ Simple\  interest\  for\  n\  months = \frac{P × n × R}{12 × 100} $$

n = number of months.

$$ Simple\  interest \ for\  d \ days = \frac{(P × d × R)}{(365 ×100) } $$

d = Number of days (non-leap year)

Practice Quizzes

Simple Interest Quiz 1 – Coming Soon

Simple Interest Quiz 2 – Coming Soon

Simple Interest Quiz 3 – Coming Soon

Simple Interest Problems:

Q1. A sum becomes 1.6 times of itself in five years at simple rate of interest. Find rate of interest per annum?

1. 10%
2. 12.5%
3. 15%
4. 12%
5. 8.5%

Ans: d

Let sum = P,

rate of interest = r % per annum

we know , S.I = P × r × t/100

where t is time ,

also , A = P + S.I

it is given, that A = 1.6P and t = 5yrs

1.6P = P + (P × r × 5)/100

1.6P – 1P = Pr/20

0.6P = Pr/20

0.6 × 20 = r

r = 12 % per annum.

Q2. A man invested a certain sum in scheme A at 15% p.a. for 2 years and earned Rs 1950 as simple interest. He increased his sum by Rs. ‘x’ and invested in another scheme B at 10% p.a. C.I. for 2 years and received Rs. 1680 as compound interest. Find the value of ‘x’ ?

1. Rs. 1750
2. Rs. 1500
3. Rs. 1250
4. None of these
5. Rs. 1850

Ans: b

Q3. A man invested a sum at a certain rate of interest on simple interest and he got 60% more amount after eight year. If he invests Rs. 9600 at the same rate of interest on SI, then find the total interest he would get after four years?

1. 3840 Rs.
2. 2880 Rs.
3. 2520 Rs.
4. 2160 Rs.
5. 2260 Rs.

Ans: b

Q4. Sahul invests Rs.x in a simple interest scheme at the rate of R% per annum for 4 years. If the ratio of the interest received by Sahul to x is 3:5, then find the value of R?

1. 12
2. 10
3. 15
4. 18
5. 20

Ans: C
3y = (5y × R × 4)/100
R = 15

Q5. The simple interest on a certain sum for 2 years at 8% per annum is Rs. 225 less than the compound interest on the same sum for 2 years at 10% per annum. The sum is:

1. Rs. 3200
2. Rs. 4200
3. Rs. 4000
4. Rs. 3600
5. Rs. 4500

Ans: e

Q6. A man invested a sum of Rs. 8000 at the rate of 12.5% annually at simple interest for 3 years after getting interest from an amount, he again invested total amount including simple interest at the rate of 20% compounded annually for the same years. Find the total amount.

1. Rs. 19,800
2. Rs. 19008
3. Rs. 18900
4. Rs. 18009
5. None of these

Ans: b

Simple interest = (8000 × 12.5 × 3)/100

⇒ 80 × 12.5 × 3

⇒ 1000 × 3

⇒ Rs. 3000

The amount after including simple interest = (8000 + 3000) = Rs. 11000

After investing an amount of Rs. 11000 at 20% compound interest annually, we get

Amount = 11000 × [1 + (20/100)]³

⇒ 11000 × [1 + (1/5)]³

⇒ 11000 × [(5 + 1)/5]³

⇒ 11000 × (6/5)³

⇒ 11000 × (216/125)

⇒ 88 × 216

⇒ Rs. 19008

∴ The total amount is Rs. 19008

Q7. Interest earned on an amount after 2years at 20%p.a compounded yearly is Rs.1716. Find the interest earned on same amount after 3 years at 15%p.a at Simple interest.

1. Rs. 1620
2. Rs.1755
3. Rs.1665
4. Rs.1710
5. Rs.1750

Ans: b

Q8. A and B invested same amount in two different schemes on simple interest for five years. A invested at the rate of 12% p.a. and B invested at the rate of 18% p.a. If difference between interest received by A and B is Rs. 1440, then find the total amount invested by A and B together.

1. Rs. 5400
2. Rs. 9000
3. Rs. 4800
4. Rs. 9600
5. Rs. 4500

Ans: d

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Frequently Asked Questions About Simple Interest

Q1: What is simple interest and an example?
Simple Interest (S.I.) is a way of determining the interest amount on a specific principal amount of money at a given interest rate. For example, if a person takes out a Rs. 2000 loan at a rate of 10 percent per annum for two years, the interest on the borrowed money will be S.I.

Q2: What distinguishes simple and compound interest?
Simple interest is defined as the amount of interest earned on a specific principal amount at a given interest rate. Compound interest, on the other hand, is calculated using both the principal and the interest accumulated over the preceding period.

Q3: What are the types of simple interest?
When considering time in days, simple interest can be divided into two groups. They have ordinary and simple interests. Ordinary simple interest (SI) accepts only 360 days as the equal number of days in a year. Exact simple interest, on the other hand, is a SI that uses the exact number of days in a normal year (365) or a leap year (366).

Q4: What are the two sorts of interest.
In our daily lives, we typically deal with two types of interest: simple interest and compound interest.

Q5: How can I compute S.I.?
To calculate the SI for a specific amount of money (P), rate of interest (R), and time (T), the formula is:
SI equals (PTR)/100
Here, SI stands for simple interest.
P = Principal (the total amount borrowed).
R = Interest rate per annum
T = Time (years)

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Use The Links Below To Practice Topic-Wise Quizzes.

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