13

SIMPLE INTEREST

8 1NTRODUCTION

in transactions involving large sums ofmoney such as buying a house or a car etc.
nerally.
bank other agency. The bank or an
individual
erw money either from a or an or some
the
other agency from which we borrow money is called the lender and
e borro

or some
who borrows money is called the borrower. The money borrowed
is
n d i v i d u a .

n or a company
the requirement
a the loan. The amount of loan may be big or small depending upon
f theborrower.

makes a promise to return

aen a
When borrower borrows some money from a lender he (she) also
period, the borrower has not only
ofer a specified period of time. At the end of the specified some additional money for using
D4Y the money which he had borrowed but also to pay
to pay
ender's money.

132 SOME DEFINITIONS

is known as the principal or sum.

PAINCIPAL The money borrowed by a borrower from a lender
used his money
NTEREST The additional money paid by the borrower to the lender for having
is called the interest.
AMOUNT The total money which the borrower pays back to the lender at the end of the specified
period is called the amount.

lt follows from the above definitions that:

Amount Principal + Interest

A=P+1, where '4' standsfor Amount, P for Principal and T for Interest.

13.3 SIMPLE INTEREST

s diseussed above that at the end of the specified period the borrower returns the money
Browed to the lender. In addition to it, the borrower also pays some additional money as
lerest to the lender. The interest is paid according to an agreement between the borrower
hand lendèr. The agreement is generally in the form of rate per unit of the principal
TOWed, It is usually given in the form of a per cent of the principal per year or per annum.
interest on Rs 100 for 1 year is known as rate per cent per annum.
SMPLE
NEREST
un Ifinterest is calculated uniformly on the original principal throughout the
period, it is called simple interest.
y interest, we shall mean simple interest.
us,if Rs 1s
P is the
the principal and the interest rate is R % per annum, then
Interest on Rs 100 for 1 year = Rs R.
13.2 Mathematics
+ec
for
Cass V\
R
Interest on Re 1 for 1 year = Rs
100
R
Interest on Re 1 for T' years Ks xT
=
100
PxRxT
Hence, Interest on Rs Pfor Tyears Rs 100 =
=Rs 100
Let us now take of interest and
some examples to illustrate the calculations amount.

ILLUSTRATIVE EXAMPLES
Examplee1 A sum of Rs 800 is lent for one year at the rate of 18% per annum. Find
interest. the
Solution Here, we have
P=Principal = Rs 800, R = Rate of Interest = 18% per annum, T = Time =1vea
Now, Interest on Rs 100 for 1 year = Rs 18

18
Interest on Re 1 for 1 year= Ke
q00

Hence, Interest on Rs 800 for 1 year = Rs 18 x800 = Rs144

100
Aliter We have,
P= Principal = Rs 800, R = Rate of Interest = 18% per annum, T = "Time =1
year
Let I be the interest. Then,

7-PEL
PRT 800x 18x1)
100 I= Rs 100
100 = Rs (8x18) =Rs 144
Example 2 A sum of Rs 4000 is lent for 5 years at the rate of 15% per annum. Find the
interest.
Solution We have,
P =
Principal =
Rs 4000, R = Rate of Interest =
15% per annum,
T Time = 5 years.
Now, Interest rate = 15% per annum

i.e., Interest on Rs 100 for one year = Rs 15

Interest on Rs 100 for 5 years = Rs ( 15 x5) =
Rs75
75
Interest on Re 1 for 5 years = Rs
100

Hence, Interest on Rs 4000 for 5 years =

Rs x4000 =
Rs 3000
100
 13.3

We have,
p Rs 4000, R = 15% per annum, T= 5 years

Let I be the interest. Then,

PRT 4000x 15x5

1 100 1= Rs 1100 = Rs (40x 15x5) =Rs 3000
=

z a
n 3Anita borrowed Rs 400 from her friend at the rate of 12% per annum for2
m p l e
3 A r

years. Find the interest and amount paid by her.

We have,
OUION

5
P Rs 400, R =12%, 7= 25 years= years
2
Now, Interest rate = 12% per annum

i.e., Interest on Rs 100 for 1 year = Rs 12

5
Interest on Rs 100 for years = Rs 12x= Rs 30
5 30
Interest on Re 1 for years = Re
100
5 30
Hence, Interest on Rs 400 for years = Rs 400 Rs 120
2 100
Thus, Interest Rs 120
Amount to be paid = Principal + Interest = Rs 400+Rs 120 = Rs 520
Hence, interest and amount paid by Anita are Rs 120 and Rs 520 respectively.
liter We have,

P Rs 400, R = 12% per annum, T= years.

Let I be the interest and A be the amount. Then,

400x 12x
PRT 2
I= R
100s s 100 = Rs120

' A = P + I = Rs 400 + Rs 120 = Rs 520

an
Pe4A farmer borrowed Rs 2400 at 12% interest per annum. At the end of2
years, he cleared his account by paying Rs 1200 and a cow. Find the cost of the
Cow
olution We have,

P= Rs 2400, R 12% per annum, T=

=
2 years =years.
2
13.4 Mathematics for lass
Now, Rate of Interest 12% per annum
i.e., Interest on Rs 100 for 1 year = Rs 12

5 Ks 30
Interest on Rs 100for years = Rs 12 x

5 30
Interest on Re 1 for years =
Rel j00

Hence, Interest on Rs 2400 for

5
years = Ks 100
(30 2400 = Rs720

Amount = Principal + Interest = Rs 2400 + Rs 720 = Rs 3120.

It is given that the farmer cleared his account by paying Ks 1200 and a cow.

.
Amount = Rs 1200 + Cost of the cow
Rs 3120= Rs1200 +Cost of the cow
C o s t of the cow = Rs 3120-Rs1200 Rs1920

Aliter We have,
5
P Rs 2400, R = 12o per annum, T= 2 , years = years.

Let I be the interest. Then,

PRT
2400x12x
I
100
I= Rs 100 = Rs 24x12x Rs 720

A = Amount =P +I=Rs 2400 + Rs 720 = Rs 3120

Also, A = Rs 1200 + Cost of the cowv

Rs 3120 Rs 1200 +Cost of thecow

C o s t of the cow = Rs 3120- Rs 1200 = Rs 1920

Example5 Find the interest on Rs 1200 at 6% per annum for 146 days.
Solution We have,
146
P = Rs 1200, R = 6% per annum, 7=146 days =ocF year.

Now, Rate of Interest 6% per annum

=

i.e., Interest on Rs 100 for 1 year Rs 6 =

146
Interest on Rs 100 for 365 ear =
Rs| 6x 365
365

146 e 146 |
Interest on Re 1 for g6 year = Rs6x
100,
 o l en t e r e s
13.5

Hence,

146
Interest on Rs 1200 for 365 year =Rs 6x146 x1200= Rs 144 = Rs
Rs 28
28.80 =
365 100 5
We have,
Aiter

146 2
P Rs 1200, R = 6% per annum, T= 146
days =365 ear = year.
5
Let I be the Interest. Then,

1200x6x2|
I =* PRTI
100
=Rs| 1200xb*
100
5Rs =Rs 28.80o

Example 6 Fatima donates Rs 2000 to a school, the interest on which is to be used for
awarding 5 scholarships of equal value every year. If the donator earns an
interest of 10% per annum, find the value of each scholarship.
Solution
Here, P =Rs 2000, R = 10% per annum, T=1year.
Now, Rate of Interest = 10% per annum
i.e., Interest on Rs 100 for 1 year = Rs 10

10
Interest on Re 1 for 1 year = Re
100

10
Hence, Interest on Rs 2000 for 1 year = Rs0x2000 = Rs 200

Thus, Interest on the donation = Rs 200

This interest is to be divided into 5 equal parts

. Value of each scholarship = Rs =Rs 40

Aliter We have,
P= Rs 2000, R = 10% per annum, T= 1 year.
Let I be the Interest. Then,

PRT 2000x10x1\
1100 I=Rs 100 = Rs 200o
=

This interest is to be divided into 5 equal parts.

200
Value of each scholarship = Rs | = Rs 40.

Example 7 What principal will amount to Rs 900 in 6 years at 10% simple interest?
Solution Let the principal be Rs 100. We have,
Rate of Interest = 10% per annum
I n t e r e s t on Rs 100 for 1 year = Rs 10
Interest on Rs 100 for 6 years = Rs 10 x6= Rs 60
 13.6
Mathematics for Class
Amount = Principal + Interest = Rs 100 + Rs 60 = Rs160 y

If the Anmount is Rs 160, Principal = Rs 100

Ifthe Amount is Rs 900, Principal = Rs 160 (100900 Rs 562.50

Aliter We have,
A Rs 900, T =6 years, R 10% per annum, =

Let P be the Principal and I be the Interest. Then,

I= Ex10x6) 3P
100
I=Rs
100 Rs 5
Now,
A=P+I
>900 =P+ 2
5

5P +3P 8P 900x5
900=
8 900 P=
8
= 562.50

Hence, Principal = Rs 562.50

Example 8 In how many years will Rs 750 amount to Rs 900 at 4%
per annum?
Solution Here, P= Rs 750, A = Rs 900, R = 4% per annum.
Let Rs 750 amount to Rs 900 at 4% in
per annum Tyears.
Now,
Interest =
Amount -

Principal = Rs 900 -

Rs750 =
Rs150
PRT
I
100

750x 4x T
150
100

150 x 1000
T= 750x4 years = 5 years.

Thus, Rs 750 amount to Rs 900 at 4%

per annum in 5 years.
Example9 A sum of money doubles itself in 8
years. What is the rate of interest?
Solution Let the principal be Rs P and the rate of
interest be R% per annum.
Since the money doubles itself in 8
years, i.e., it becomes Rs 2P in 8
S.I. years.
=
Amount - Principal
S.I. = Rs 2P- Rs P= Rs P

Now,
PRT PxRx8
S.I. = 00
100
P=.
100
RX100 10o
Px8 12.5.
Hence, the rate of interest is 12.5% per annum.
e merest 13.7

Eanple
10 Ris Rishi deposited Ks 20000 in a financial institution on 28th March, 2000 and
eloses his account on 21st August, 2000. If the institution pays an interest of 9%
per annum, what amount does Rishi get?

Here, P Principal = Rs 20000 and R = Rate 9% per annum.

In calculating the time, we count the number of days, excluding the date on
which the money was deposited and including the date on which the money was
withdrawn. Thus, we have
Number of days = 3 day (March) + 30 days (April) + 31 days (May) + 30 days

(June)+31 days (July) +21 days (Aug.)

= 146 days

146 2
T=Time =146 days=a365 year=
ear* year

LetI be the interest. Then,

PRT
2000x9x
100
I= Rs 100 Rs 720

Interest = Rs 720

Now, Amount = Principal+ Interest = Rs 20000+ Rs 720 = Rs 20720

Thus, the man receives Rs 20720 on 21st Aug. 2000

Example 11 Find the simple interest on Rs 1000 for 6 months at the rate of5 paise per rupee
per month.

Solution We have, P = Rs 1000 and T= 6 months

It is given that the interest is at the rate of 5 paise per rupee per month, i.e.,
Interest on Re 1 for l month =5 paise.
30
Intereston Re 1 for 6 months =
(5 x 6) paise =
Rs
100

30
Intereston Rs 1000 for 6 months = Rs x1000= Rs 300
100

Hence, Simple Interest = Rs 300

EXERCISE 13.1
. Find the simple interest, when:
0 Principal = Rs 2000, Rate of Interest = 5% perannum and Time = 5 years.

Gi) Principal= Rs 500, Rate of Interest=12.5% per annum and Time = 4 years.

4% per annum and Time =6 months

M Principal = Rs 4500, Rate of Interest =

Principal Rs 12000, FRate of Interesi = 18% and Time =4months.

=
perannum
Principal = Rs 1000, Rate of Interest 10%per annum and Time=73 days.
13.8 Mathematics for Cass
2. Find the interest on Rs 500 for a period of 4 years at the rate of 8% per annum.,Also, find.
Also, find
amount to be paid at the end of the period.
interest at the end of 2 years.
3. A sumof Rs 400 is lent at the rate of 5% per annum. Find the
annum. Find the interest.
4. A Sum of Rs 400 is lent for 3 vears at the rate of 6% per
an interest
at the rate of 20 0% per annu
5. A person deposits Rs 25000 in a firm who pays
Calculate the income he gets from it annually.
Find the amount he has to p
6. A man borrowed Rs 8000 froma bank at 8% per annum.
1
after4 years.
7. Rakesh lent out Rs 8000 for 5 years at 15% per annum and borrowed Rs 6000for
or3 yearsa
12% per annum. How much did he gain or lose?
8. Anita deposits Rs 1000 in a savings bank account. The bank pays interest at the rate of 5%ne
annum. What amount can Anita get after one year
9. Nalini borrowed Rs 550 from her friend at 8% per annum. She returned the amount after
months. How much did she pay?
10. Rohit borrowed Rs 60000 from a bank at 9% per annum for 2 years. He lent this sum of money
to Rohan at 10% per annum for2 years. How much did Rohit earn from this transaction?

11. Romesh borrowed Rs 2000 at 2% per annum and Rs 1000 at 5% per annum. He clearedhis
debt after 2 years by giving Rs 2800 and a watch. What is the cost of the watch?

12. MrGarg lent Rs 15000 to his friend. He charged 15% per annum on Rs 12500 and 18%on the
rest. How much interest does he earn in 3 years?
13. Shikha deposited Rs 2000 in a bank which pays 6% simple interest. She withdrew Rs700a
the end of first year. What will be her balance after 3 years?
14. Reema took a loan of Rs 8000 from a money lender, who charged interest at the rateof18
Whatis
rannum. After2years, Reema paid him Rs 10400 and wrist watch to clear the debt.
the price of the watch?
15. Mr Sharma deposited Rs 20000 as a fixed deposit in a bank at 10% per annum. If 30% S
deducted as income taxon the interest earned, find his annual income.

ANSWERSs
1. ) Rs 500 (i) Rs 250 Gii) Rs 90 (v) Rs 720 (V) Rs 20
2. Interest = Rs 160, Amount = Rs 660 3. Rs 40 4. Rs 72
5. Rs 5000 per annum 6. Rs 10880 7. Gain = Rs 3840
8. Rs 1050 9. Rs 572 10. Rs 1200 11. Rs 380 12. Rs 6975
13. Rs 1590.40 14. Rs 480 15. Rs 1400

0BJECTIVETYPE QUESTIONS
Mark the correct alternative in each of the following:
1. If the simple interest on a certain sumfor 2 years at the rate of 5 % per annum is 74000,the
the sum is
(a) 46,000 (b44,000 (c) 40,000 (d)48,000
 139
rype
niereS

nany years will a certain sum become 3 times itself at 25% per annum under simple
Inhowr
interest?

5
(b8
(c) 12 (d) 6
on
The a m o u n t o n 25,000 at 8% per annu m for 6 years under simple interest is

( a ) 3 5 , 0 0 0
b)37,000 (c) 45,000 (d) 47,000
interest for 1500 at 8% per annum for 3 years is
ple
400
(b) 360 (c) R450 (d) 7500

ference between the interest obtained for 1000 at 12% per annum for 3 years and that
The
1500 at 8% per annum for 1 years is
for
(a) 3 6 0
(b) 30o (c 180 (d) T200
hich of the following yields maximum interest for 2 years?
6 at 8% per annum (6)R 1000 at 11 % per annum
(a) 1500
%per annum ( c T 900 at 20 % per annum
(c)2000 at 5 then the
#a Sum of 7 3000 is lent out at 3 % per annum for 20 years under simple interest,
end of 20" year is
amount at the
T 1080 (c) 3600 ( c 4800
(a)F1800 (b)
of 2000 is lent out at 2 % per annum for 10 years under simple interest, then the
alfa sum
amount isS
(b) T2400 (c) T 200 (d) 1500
(a) T1400
xfor 2 years at R % per annum is7 80, then interest on 7 2xfor one year at R %
/ Ifinterest on
per annum is
a) T 160 (b) 740 (c)80 (d) 120

49 is
10. At simple interest a sum becomes of itself in 2 years. The rate of interest per annum
40
(b) 8% (c) 12 % (d) 9%
a) 7%
11. At what rate per cent per annum simple interest will a sum double itself in 10 years?

(a) 8% (10% (c) 12% (d) 12%

12. In what time will a sum of 8000 amount to 8360 at 6 % per annum simple interest?

(a) 8months (b) 9 months (c) 1months (d) 1 years

. a, band care three sums of money such that b is the simple interest on a and cis the simple
interest on b for the same time and same rate. Which is the following is correct?
(c) b2 = ac (d) a = bc
Ja) abc=1 (b) c ab =

years will be of
Ihe simple interest at R% per annum for n non a sum

100 (a) 00
a) n (b)100n (c)
15. 6
The simple interest
int on a certain sum is oof the sum. If the rate per cent per annum and the

is
une are numerically equal, then the rate per(c)cent6%
a) 89% (b) 4% (d) 12%
Awhcih rate per cent per annum simple interest will a sum treble itself in 16 years?
(a) 12% (b) 10.5% (c) 11.5% (c) 12.5%
ANSWERSs
1. 5. (c) 6. (d) 7. (d)
2. (b) 3. (b) (b)
8.(6)
15. (a)
9. (c) 10. (d) 11. (6) 12. (b) 13. (c) 14. (c)
16. (d)
13.10 Mathematics for Cla
THINGS TO REMEMBER

1. The person who borrows money is called the borrower.

2. The person who lends money is called the money lender.
3. The money borrowed from a lender is called the principa.
4. he additional money paid by the borrower to the lender for having usea nis money is callerd.
d the
interest.
5. The total money which the pays back to
the lender at the
end of the spec ecified period is
borrowe
called the amount.
6. Interest is said to be simple if it is calculated on the original principal throughout ihe loan period
7. n calculating the number of days, we do not count the day on which the money Is deposited but th.
he
date of withdrawal is counted.

Number of days
8. Number of years =
365
9. fP=Principal, R= Rate of interest per annum and T=time, then the simple interestis given by

PRT
S.I. 100