Scribd
Upload
4 views2 pages

Simple Interest Formulas and Methods

The document explains the concept of simple interest, which is calculated as a fixed percentage of the principal amount over a specified time period. It provides essential formulas for calculating simple interest, principal, and amount, along with shortcut methods for various scenarios. Additionally, it discusses the effects of changes in principal, rate, and time on simple interest calculations.

Uploaded by

dayanidhibaishak145
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
4 views2 pages

Simple Interest Formulas and Methods

The document explains the concept of simple interest, which is calculated as a fixed percentage of the principal amount over a specified time period. It provides essential formulas for calculating simple interest, principal, and amount, along with shortcut methods for various scenarios. Additionally, it discusses the effects of changes in principal, rate, and time on simple interest calculations.

Uploaded by

dayanidhibaishak145
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd

Simple Interest

Simple interest is nothing but the fixed percentage of the principal (invested/borrowed/ amount of
money).

Principal (P): It is the sum of money deposited/ loaned etc. also known as "Capital".

Interest: It is the money paid by the borrower, calculated on the basis of Principal.

Time (T/n): This is the duration for which money is borrowed.

Rate of Interest (r/R): It is the rate at which the interest is charged on principal.

Amount (A) = Principal + Interest

Some Basic Formulae :

Simple Interest (SI):


P×R×T
SI = 100

P = Principal,
r = rate of interest (in %)
t = time period (yearly, half yearly etc.)

prt rt
Amount (A) = P + SI = P + 100 = P (1 + 100 )

Some Useful Short-cut Methods:

1. If a certain sum in T years at R % per annum amounts to Rs. A, then


the sum will be
100×A
P = 100+(R×T)

2. If a certain sum is invested in n types of investments in such a


manner that equal amount is obtained on each investment where
interest rates are R₁R₂ R₃ .....Rn respectively and time periods are T₁ T₂
T₃..... Tn respectively, then the ratio in which the amounts are invested
is :
1 1 1 1
∶ ∶ ∶ ……
100+R₁T₁ 100+R2 T₂ 100+R ₃T₃ 100+Rn Tn

1 [Link] | [Link] | [Link] | [Link]


3. If a certain sum of money becomes n times itself in T years at simple interest, then the rate of interest
per annum is
100(n−1)
R= %
T

4. If a certain sum of money becomes n times itself in T years at a simple interest, then the time T in
which it will become m times itself is given by
(m−1)
T= ×T
(n−1)

5. Effect of change of P, R and T on simple interest is given by the following formulae:


Change in Simple Interest
Product of fixed parameters
= × [difference of product of variable parameters]
100
For example, if rate (R) changes from R₁ to R₂ an P and T are fixed, then
PT
Change in S. I. = 100 × (R1 − R 2 )
Similarly, if principal (P) changes from P₁ to P₂ and R and T are fixed, then change in
RT
S.I = 100 × (P1 − P2 )
Also, if rate (R) changes from R₁ to R₂ and time (T) changes from T₁ to T₂ but principal (P) is fixed, then
change in
P
S.I. = 100 × (R₁T₁ − R₂T₂)

6. If a certain sum of money P lent out at S.I. amounts to A₁ in T₁ years and to A₂ in T₂ years, then
A₁T₂−A₂T₁
P= T₂−T₁
A₁−A₂
R = A₁T₂−A₂T₁ × 100%

2 [Link] | [Link] | [Link] | [Link]

You might also like