Aptitude Simple Interest Tutorials & Tricks

Simple Interest Tutorials & Tricks

Introduction

'Simple Interest' A quick method of calculating the interest charge on a loan. Simple interest is determined by multiplying the interest rate by the principal by the number of periods. Where: P is the loan amount I is the interest rate N is the duration of the loan, using number of periods.

Formula for finding out Simple Interest

1. Principal: The money borrowed or lent out for a certain period is called the principal or thesum.

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

3. 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 (p.a.) and Time = T years. Then

(i). Simple Intereest = ((P*R*T)/100)

(ii).P = ((100*S.I)/R*T); R = ((100*S.I)/(P*T)) and T = ((100*S.I)/(P*R))

4. Calculate Total Amount Accrued (Principal + Interest)

A = P(1 + rt)

5. Calculate Principal Amount, solve for P

P = A / (1 + rt)

6. Calculate rate of interest in decimal, solve for r

r = (1/t)(A/P - 1)

7. Calculate rate of interest in percent

R = r * 100

8. Calculate Total Amount Accrued (Principal + Interest)

A = P(1 + rt)

Sample Example

Ex

Mohan borrowed some money at the rate of 5 % p. a. for the first two years, at a rate of 8 % p. a for the next three years, and at the rate of 10 % for the period beyond five years.. If he pays total interest of Rs. 12500 at the end of 8 years, how much mony did he borrows ?

A

 Let P be the sum borrowed ((P*5*2)/100)+((P*8*3)/100)+((P*10*3)/100)= 12500, P = 199531.25 

Ex

A sum of money doubles itself in 8 years at simple interest. What is the rate of interest ?

A

 Let the Sum is Rs 100, after 8 years it will become 200 So Interest will be = 200 - 100 = 100 , so the rate of interest will be : RI = ((100*SI)/(P*T)) = ((100*100)/(100*8)) = 12.5%