Interest is extra money paid for borrowing money.

 

If I gave Rs 10,000 to Sanjay for 1 year. I will take my

Rs 10,000….. and also some other money

(for letting him use my money for a period of time)

22.jpg

 

After one year,

23.jpg

 

Suppose I say, I give Rs 10,000 to Sanjay at 10% per annum interest How much amount does Sanjay have to pay after 1, 2, 3, 4, 5 years?

 

Interest = 10% per year

Interest will be on Principal

 

Interest for 1 year = 10% of Principal

= 10% × Principal

= 10% × 10,000

= 10/100 × 10,000

= 1/10 × 10,000

= 1,000

 

∴ Rs 1,000 interest is there after 1 year.

 

So, Total Amount = Principal + Interest

             = 10,000 + 1,000

                            = 11,000

 

What about 2 years?

Interest for 2 years = 2 × Interest for 1 year

= 2 × 1000

= 2000

 

Let’s make a table

Year

Principal

Interest

Amount

1 st year

10,000        1000 11,000

2 nd year

10,000

    2 × 1000 = 2000

12,000

3 rd year

10,000

    3 × 1000 = 2000

13,000

4 th year

10,000

    4 × 1000 = 2000 

      14,000

5 th year

 

10,000

    5 × 1000 = 2000

 

     15,000

 

So, Total amount = Principal + Interest

     = 10,000 + 2,000

                            = 12,000

 

Suppose I have Rs 1,000 and I put it in the bank. What will be the amount I have after 1, 2, 3, 4, 5 years, if rate of interest is 5% p.a?

 

After 1 year,

Interest after 1st year = 5% of principal

    = 5% of Rs 1000

   = 5% × 1000

   = 5/100 × 1000

   = 5 × 10

   = Rs 50

 

After 2 years,

Interest after 2nd year = 2 × Interest for 1st year

     = 2 × Rs 50

                                   = Rs 100

After 3 years,

Interest after 3rd year = 3 × Interest for 1st year

    = 3 × Rs 50

            = Rs 150

After 4 years,

Interest after 4th  year = 4 × Interest for 1st year

     = 4 × Rs 50

     = Rs 200

 

After 5 years,

Interest after 5th  year = 5 × Interest for 1st year

     = 5 × Rs 50

                                   = Rs 250

Year

Principal

Interest

Amount

1 st year

10,000 Rs 50 Rs 1050

2 nd year

10,000

        RS 100

Rs 1100

3 rd year

10,000

        Rs 150

Rs 1150

4 th year

10,000

        Rs 200 

      Rs 1200

5 th year

 

10,000

       Rs 250

 

     Rs 1250

 

For finding Interest,

We use the formula

Simple Interest = (Principal × Rate × Time)/100

SI = PRT/100

 

For Rs 10,000 at 10% per annum. What will be the interest after 4 years?

 

P = Rs 10,000

R = 10%

T = 4

 

SI = (P × R × T)/100

= (10,000 × 10 × 4)/100

= 1000 × 4

= Rs 4000

 

So, Interest after 4 years is  Rs 4000

 

Suppose I have  Rs 1000 and I put it in the bank. What will be the amount I have after 5 years if Interest is 5% per annum?

P = Rs 1000

R = 5% p.a

T = 5 years

SI = (P × R × T)/100

= (10,000 × 10 × 5)/100

= 10 × 5 × 5

= 10 × 25

= Rs 250

 

 

Amount = P + SI

= 1000 + 250

= Rs 1250

 

 

 

 

  1. Chapter 8 Class 7 Comparing Quantities
  2. Concept wise
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Davneet Singh
Davneet Singh is a graduate from Indian Institute of Technology, Kanpur. He has been teaching from the past 8 years. He provides courses for Maths and Science at Teachoo. You can check his NCERT Solutions from Class 6 to 12.