Formulas To Solve Simple Interest Problems

August 21, 2019

Simple Interest Formulas

Simple Interest is the rate at which we lend or borrow money. In simple terms, when a lender lends money to a borrower, the borrower has to pay an extra amount of money to the lender.  This extra amount of money is called interest. The interest on a sum borrowed for a certain period is called simple interest. 

  • Simple interest is calculated by multiplying the daily interest rate by the principal by the number of days that elapse between payments.
  • This type of interest usually applies to short-term loans,.
  • Basic Formula PxRxT/100
Formulas for Simple Interest

Formula for Simple Interest

Simple Interest Formulas

SI = P*r*t/100

Where,

P = money borrowed or lent out for a certain period(principal)

r = rate of interest

t = time period for which the amount is lent

  1. Principal = 100* SI/ R * T
  2. Rate = 100* SI/ P * T
  3. Time = 100* SI/ R * P

To get total amount of money

Amount = Principal + Interest 

A = P + I

Formulas based Questions on Simple Interest

Example 1

Find the simple interest on Rs. 65,000 at 6(2/3)% per annum for a period of 9 months?

Options
(A) 3520
(B) 3250
(C) 2350
(D) 5320

Explanations
Principle = 65,000
Rate = 6 \frac{2}{3} \
Time = 9 months

Principle = 65,000

Rate =  \frac{20}{3} \

Time = \frac{3}{4} \

S.I =  \frac{P*R*T}{100} \

= Rs. [65000×(20/3)×(3/4)×(1/100)]

= 3250

Correct Option(B)

Example 2

What sum of money will amount to Rs. 520 in 5 years and Rs. 568 in 7 years at simple interest?

Options
(A) 350
(B) 400
(C) 550
(D) 500

Explanations

Amount in 5 years = Rs 520
Amount in 7 years = Rs 568

2 years S.I = 568-520 = 48
Simple Interest for 1 years = latex \frac{48}{2} \ [/latex] = 24

5 years amount = Rs 520
For 1 years = 5*24 = 120

P = A – S.I = 520-120
 P = 400

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