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,

Simple Interest - Part 2

 

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 = 3000

13,000

4 th year

10,000

    4 × 1000 = 4000 

      14,000

5 th year

 

10,000

    5 × 1000 = 5000

 

     15,000

 

So, Total amount after 2nd year = 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

= (1000 × 5 × 5)/100

= 10 × 5 × 5

= 10 × 25

= Rs 250

 

 

Amount = P + SI

= 1000 + 250

= Rs 1250

 

 

 

 

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Davneet Singh

Davneet Singh has done his B.Tech from Indian Institute of Technology, Kanpur. He has been teaching from the past 13 years. He provides courses for Maths, Science, Social Science, Physics, Chemistry, Computer Science at Teachoo.