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How to calculate Simple Interest quickly?

31-JAN-2018 18:47

    The value of money is not constant. It changes. When borrowed today, it should be paid tomorrow with an extra charge that is known as INTEREST.

    There are two types of interest – Simple Interest and Compound Interest.

    Simple Interest

    Let us understand the basic concept of SIMPLE INTEREST which is an important topic of Quantitative Aptitude Segment from exams perspective.

    SIMPLE INTEREST:

    Simple Interest Meaning

    If a person X borrows some money from another person Y for a certain period, then after that specified period, X (borrower) has to return the borrowed money with some additional money. This additional money that X (borrower) has to pay is called Interest.

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

    MATHEMATICAL FORMULAS:

    Formula to calculate simple interest:

    Simple Interest Formula

    The actual borrowed money is called Principal or Sum (P).

    The time for which X the borrower has been used the borrowed money is called the Time (T).

    The interest that X has to pay for every 100 rupees each year is called Rate Percent Per Annum (R).

    Learn the basic concepts and formulas of Percentages

    Formula to calculate amount:

    Simple Interest Amount

    The amount (A) to be paid with interest after a certain time is the sum of the principal amount and its interest.

    Simple Interest Amount Formula

    Formula to calculate time:

    Simple Interest Time

    Time (in years) can be calculated by the formula below if the total Interest (I) and Interest for one year on the Principal amount (I1) are known.

    Simple Interest Time Formula

    Where I is the total Interest and I1 is the Interest for one year.

    SOLVED EXAMPLE:

    Let us understand the formula of Simple Interest with an example:

    Example: What will be the simple interest on Rs. 78,000 at 10% per annum for 9 years?

    Solution: Here, given that

    Principal (P) =78,000

    Rate (R) = 10%

    Time (T) = 9 years

    Now, we know that

    Simple Interest Example

    Therefore, the simple interest on Rs. 78,000 at 10% per annum for 9 years will be Rs. 70,200.

    So, now you know that calculating Simple Interest is as easy as ABC.

    DISCLAIMER: JPL and its affiliates shall have no liability for any views, thoughts and comments expressed on this article.

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