INTEREST – COMPLETE MATHEMATICS NOTES (ENGLISH)
1. BASIC TERMS
• Principal (P): The original amount of money invested or borrowed.
• Rate (R): Interest rate per year (percentage).
• Time (T): Total duration for which the money is borrowed or invested (in years).
• Amount (A): Final value after adding interest to the principal.
• Interest: The extra money paid or earned for using someone’s money.
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2. SIMPLE INTEREST (SI)
Definition:
Simple Interest is calculated only on the principal amount for the entire time period.
Formulas:
• SI = (P × R × T) / 100
• A = P + SI
Meaning of symbols:
• P = Principal Amount
• R = Rate of Interest
• T = Time (in years)
• SI = Simple Interest
• A = Total Amount
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3. SIMPLE INTEREST – EXAMPLES
Example 1:
P = 10,000, R = 5%, T = 2 years
SI = (10000 × 5 × 2) / 100 = 1000
A = P + SI = 11000
Example 2:
P = 8,000, R = 6%, T = 3 years
SI = (8000 × 6 × 3) / 100 = 1440
A = 9440
Example 3:
P = 15,000, R = 4%, T = 1 year
SI = (15000 × 4 × 1) / 100 = 600
A = 15600
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4. COMPOUND INTEREST (CI)
Definition:
Compound Interest is calculated on the principal plus accumulated interest.
Each year’s interest is added to the principal to calculate interest for the next year.
Amount Formula:
• A = P (1 + R/100)^T
Compound Interest Formula:
• CI = A – P
Reverse Formula:
• A = CI + P
Meaning of symbols:
• P = Principal Amount
• R = Rate of Interest
• T = Time in years
• A = Amount
• CI = Compound Interest
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5. COMPOUND INTEREST – EXAMPLES
Example 1:
P = 10,000, R = 10%, T = 2
A = 10000(1.10)^2 = 12100
CI = 12100 – 10000 = 2100
Example 2:
P = 5,000, R = 8%, T = 3
A = 5000(1.08)^3 ≈ 6298
CI ≈ 1298
Example 3:
P = 20,000, R = 5%, T = 2
A = 20000(1.05)^2 = 22050
CI = 2050
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