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Quantitative Aptitude :: Simple Interest

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Simple Interest Important Formulas


When we borrow a certain sum of money over a period of time, we agree that we will pay it back, along with a fee, known as the interest owed. Similarly, when we invest a sum of money in a savings account, the account earns us interest. This lesson will show you how to calculate a certain type of interest called simple interest.

What is Simple Interest?


● The money borrowed is called the principal (P).

● Extra money paid back is called the Simple Interest (S.I).

● Interest is expressed as rate percent per annum (p.a.) i.e., 13% per month means, the interest on Rs.100 for 1 year is Rs.13.

● The total money paid back after the given time is called the amount.

● Time for which money is borrowed is called the time period.

Principal:

The money borrowed or lent out for a certain period is called the principal or the sum.

Interest:

Extra money paid for using other's money is called interest.

Simple Interest (S.I):


If the interest on a sum borrowed for certain period is reckoned uniformly, then it is called Simple Interest.

Let Principal = P, Rate = R% per annum and Time = T years. Then


\( \mathbb{i.}\) Simple Interest (S.I.) = \(\frac{\left(P \times R \times T \right)}{100}\)

\( \mathbb{ii.}\) Principal (P) = \(\frac{\left(100 \times S.I \right)}{\left(R \times T \right)}\)

\( \mathbb{iii.}\) Rate (R) = \(\frac{\left(100 \times S.I \right)}{\left(P \times T \right)}\)

\( \mathbb{iv.}\) Time (T) = \(\frac{\left(100 \times S.I \right)}{\left(P \times P \right)}\)