INtereat & Anuiby tee:

Simple Iterut neaning K Defre Vaous

Foma: SI PxN XR
100

B) aleulate simple iterut on 20, o 00 bor 8h yea

6 rate
at 6% o} inte reyt pes ahnum

f 50,000 wil1 amout

to' G0,000 at 0% om ple ite rast!co

9) Simple Interet on ces tain gum

thansSmpleintererton the sa
byt &40. ind
more

5yea at the same au

tor @ ie eny to ADiis &n
the ponepal amount
Amisha borwedLo8,0 00 B 5, 00
g4) Anita and at the sa me rde so Smeterest.
vUNpe dti vely pay e e oan by girin9
3y easu Anita e should Am isha pay aftw
amount
7/0,) 60: Ho w
much
loan in eluding simple
4/2yeayS, to pay t& he
intert
abant
30,090tm
CRr) Mukeh took a at doage ate UI pa. He alo took a
le inteert 10% p-a om simle
iend of T 40, 0oo at
loon om his interest will he
interut Onwhjch prinipal the simle
more o7teh 3 yane how, muctk mee?
ano ut to? IS,&40, abtas 4yaae includig
A prinupal unt to n76o atta the 6yeas
simple inteet and it amo odfhe phhuipel and ote
pith the sinple iterut:
f smple interet
sAnukept a certun S amount in a bank, g? ing simpl2
hme itwe
iterut at 8/ p-a tor S yeaw cand gotidantial
ao kapt apnot
bat sinple jterest
T Pra calla
at I17 e iterist oiyha will get
&8) Neha desoit eo a sipe intnest.
50,000 h a bank , ón a
ramoned
iteret Upo drat point c well Thereatte she
Gimge
he Yenaùn ing amount ata 4gear, andl.then al, he recajd
wel
iNorut acd ll hat t e as
itst Aod me hat of intt
*22,050 u total óme

ompoand Iatenet
Dnd te ConmpoundLntere b and te ambut
for 15gean
vinvesteder out 82 ompourdd
15 geae ot
) Seni-annully i) ganteuly
wllit take b L200 to amount
) How calulattpl
con vestool
to 2, 000 at S.
3) what sum 'will amoud to . 5,5 25 at 1o. p.
onmpoundad yeany Bor 13 gy eau
hot
bmla horompónel Ltuet vohan 'hod

CI

shee = Ral o ita l i Pes cat

the uicod tonounaled

ditteaene behwean sinyle inorest and
4) Jhe yea! is
Compoun inent on a ih ipal fo &
hbten the same nnnupa
he sinyle
76-8
interest
dcte
 sime and comyonal ateront Pyean
Gn te same pinupa, ' at te ssame nti q ae t 3, 000
an3,12 0 espedively Gnd the pon apal and the Sutl
Presti kypt a certain a mount in a hxed dopnt
6 amowt
/At tie ot malilys he received total fntret
vompounal interest. Bnel rate
reeti kept certain amout in a tixed bpon't
bank volu'ch lo/ ate
In a
co -opeAative
interest, omyundoo At te time of maunty
onially
ofter ye as she receives' T73, 2o5. find tne phinil
amount
D How mu ch should be in ves ted al 6/ peh annm
so that otes 4years the amount il| be 2,50O
when the inte ret cononold annually
&) Ra neslh appoa ches
lo an tae pua chamirg
a

ca
Cas
fnaning compang foa
2he conyey eretive oftert
Loan scheme0:
ci) toan Ri 2, oo, 00 6 tes Sgyeae at 57 paat o
interut omrunal annually
c)
Ci) Loan ke 2, 00, 000 ker 5 yaa at le pa: rate
itset cempounod monty?
Tutorial shee Roshani upta 2lo8/s
Interat:
Simple Iterert and Compound
tollowingTable o
&) Complete he gollo vet, Interest
dCalcelat tue ate aClovdina to Simple
Priouped Rate dear Iterut10Total sL for
10
all 6yeax=
2rd.
h 10

00 t th
15
and/o interesto in pal
Calculat tie oate Compound Zterert
) ount actovding to
Lterst Total C1
PinipalRate yea
)
3yea
1o0 Totl pyatle
15 2 ambuat
26 5
107.

qa) findthe cimple Iuterut on 3,600tor aa

morth ct annumo
rat, wil
wlla oex on who invet,h 2,000
8) At what at Sim ple intere t in
will eceive Z T2,090 yeas
(Hiot: Conveot e monte ’ in yeas=Imory
|2moth
a montw 1yean= l2
4hotmtt.9yeax= eny
12

borDwed a7,000 6rom two bin ana

shopkeap ahnum
jutitutiow: for one |oan, he paucl 12/ (Pe
oter be paid l2.5/ pe annum.
and toY he hadA to pa 4 6, 630
Aftes two er
btt the loan were n Smple jnterejt
interest. 9)
find Qmo unto Os thle loang
q) find om poundamount interat ndhe amourt
e 4, 80o jor 3yea t 47 pen annum wshon
te iterest is payabo
ci) annua llyer yanty Cii) month
86) Houw
in vut
much
now at
OY Semi -

should -annualy
a
6O 30- yea old man
97 pa. compo unded semi- annaally
fo obtaun a (ump-Sum F,5O, o 00 at uo hme
e retire ment when he attain tue age f 60yeahe !
gi) The dab6erence betw eon simple and ompoun d interet
for &years at 51. i money put out
a

76Q5: Pid the sum

Q8) When Rohan and Sha yama wereblesed L h
a
ba by girl, ha pla cecd ? 490o o to hes Creclit
as account that pay at the Sate o6 97. pa.
tompoun olod mnontty. Hnd theanount in hes
AOU acLoUnt attes Oyeal
Pruent Vale
Fute Valu
Nominal and Etfe di ve Rat Itt

Pelent Value
Dol" The sun due at tlu end
a given pouod o time that swm thich togethe
oith it interert tas te given nesd g time at
sun due

formula fe heset Value

The present v alue an amout due,A at
peiod in tn'interert puodi is the
tue rate r pe invuted at is rat and time would
Sum, P wwch
amount to A,
Hena as, A
P = A

fute Value amount

to thethe interert Accu mulatedamount
The futue Value hefers
money, including intut
after
SUm
pelified peiod at a gven
A= PxC+i)
 Ftue Value
) Mis. Khanna kap ? 55,000 in a bank in fixed dopont
ka 3 gean at 9% p'a: So alto get a minirmurn bf
F70, 00O ter 3 years Check whether her reqenent
wll be folfilled o not
person with two
) Mr. Mehta was approache d by a )20, 600.
ple oe schemee a he wanted to iovegt
In sch eme A, the per iod wa Oyeare with 9/ rate
compoun ded onnually. I schene B, the period was
To years with 8/. pound interest pa Advihe hin
com the omo un
about the choice (eheme wt
to be received.
3) SbhoI in veste
d8o 00 a ban ato (estoin
rate and got 9, 33, |20 a hefioad a mount
2 yeor Gnd 2reyt.
Lom poun ad inter
Present Value
) find the presert ualue at 5% rate of interegt of
790&-80 payabte at 3 year how

}ya pomuie t give ketan 25,/00 ater 2ear

and he 'aill pàg Subhash 3200 o4ta yea rs\~
:) koy promije d to given ketan R 3 66,025 aeu
4 yeors If the rate % nterut

B Anita romised to poy F 8,00, 000 oter 5years to

Aar dti She also Promised to pay 450, o0 o
4 yearsind -the Johan
otal þruentwoy th o7 both
ann ualy
Nominal and Effeti ve Rate Iteret

- 1
E{fective Rate
Rate o Tnteet
whee i-tae nominal rate ok Ieregt

Nominal

Diffe ence Betaaun Nominal and sffective Rate of

Interegt

When Compounling i doe les an otiol a yea sy

for
sortht petiod
quataly and a ate
Tate of interest is quoto Interet.
That ete is cole nominal te a
khow that rate in terns %
-to
But we want
annually, we jnd efectlive iate
Comp sunoling bein done
interest
in vest lb0 tor a yea
at 84 Compounol interest
compouhal and compo ohding
slone quotery x4eiR 8-24
-J00- Rto&-4

But Same
scme Fl00 invet tor a year wnth
Compounding done ahnually & ate g interest
8J47 ve
we get

o.0824 00 8
`o wnth di lerent Conpound ntelet ey we get Same
 Compound interet ual
Not when copounding i onsiderecol tor anh
Nominal nte = tjleive ralee
And in gereial
Norminal atey Eleckve vates
Lueton
)find the elbective vate that is eguivalet
t nominal ote at 8 compo und ed
() semi annualy
G) quaitealy
the e77ecti ve ate that io eguivalent
a) find the
to nomnal ate at 6 Lompounolol
6) mi annually
o)
s) find the ebfecive rate thot io euivalent
nominel ate
tate

6) quateay
ir) monthly
Ghi) coninuosly
4) find the nominal rate compounded
(i) quaxtesly which io egui valent to 5/. eb je slive
semi- annually which is 'egi valent to 427 elfeitie
5) Hind homial rate ompourded guarterly cohick
the
ie euivalent to 57. compb unoleal semi- annudlly.
Present Value (
)Find the prerent value o 500 due /0 years
1o. pa compound ed
hence when inteyeet io 1o.
(i) hal byeany
) Find the present value f 30,00 0 due
years hence -the intesest rate io &
pa Lompounde d gutor y
future Value
) Find the futwre vale F I,25,0oo lept in jredl
daposi t tur 5yeats at ). com pound interest
24,S00
F kept a a ixeo
&) find the tture value
a)
deposit. aftes 7 yeats at 7/ p-4, compounded
guion tesly
Anniutiar
Sen e
A o caeol
made at esual inteval o timu
onnuity
Ordinasy Annuity
When all the pouodi c payment are macle at
ond
tue an ol
ea ch payment peuod, it is calleol
iDiate annutY o aol'nasy annuby
fomla tor tining sun e an ordinary innwity

where
t

ofintaliment
Quutio
D whati the amount annuityof the sjz
each payment u Ri 3, 000 payable at he end f
eoch year tor 3yeas at an interey t at of 9%
tompo unded annually?
2) find eamoUnt, of an annuity y 2,
6 montu for 8 yeaos and 6 mon the, if te 500 eveny
noney io
woath 5-47. tompoun de &l seni- annuay
an
3) A man deposit Soo at athe end of eveny yeat

(p a) conponeled gonuilly. How imveh

sarings in' 7yeo
annwty ongisting ef
4) Find he amount o enod
an
of evey 3monty
F600 at tue
pagmant te
ue ale of
os 8.
S7. ompounelacl guartesty
kor 34year at
)A banh pays ntert at the r tt of 8/
ompoundad semi-annually a pern n plcee ?500o
in tie bank at the end of evesy 6mohty, how ntcl
will be in is' cctocint to ato Syea ?
Psesent Value of an Annuity
The prerent value o an annity is the su of tre
prese nt value of llte payonanto
To othes wode, the pruent value of on annty
must be
amount of money that mut be invested
tetue

n=numbeh ytalmet. a
Puoion (8)
DFind tue prerent value annuity yoo0
payable at the end of each yegr fox oyears if the
money is worth 57. bbective
) Find preeent value an annuity Re 5oo
payable tc t tthe
e ehd ob each 6 monthe tur
worth 6
4yeavs, f the moneg is omboonlod
2emi- qnnually

3) Find te preent value of an annuty 6

each yeare ox
Payable at the e hd of
fmoney 57. ebse cti be
4) find t e present value an annity o R 2,500
payable at the end of each 6 monthe to 5yeae
if money woh lo conve ted semi-ann ua y
s) Mr kulha) bought a one ton A G. with a
payment FS,ooDand 44 month ly
instalmnt oof 250 o each what io the ost t
compa ny charges 2°/" inte rept, compunte
d cnually ?
6) M Vohra puchau ed
* 70, co o with a down,N payment of goo0
9o and
qartely instalment if the cormpany
companywishes to
qet 12 pias CompoondeA interert?
 Tutorial
Ordinany hnnuithea compound interet
with 12
)Manisha dle pouit F500the final amount if
for Byeas find
is at end of each month
() payment end of eahquast
(i) paynant. n at the
()Nishant deposit 6,000 at
inteiet pa
in a a bank gìing 9/ ompound
honth
attumulateal am ount ate 1 yeas
find tne at tue
annuity to be pai d
3) Find the tesultting into te
bor 8 years 37,23 o.66 at the
each yeas *,
matoi ly amount
toute 107- pa
Y() fin d the annuity to be paid ot the endl
month tae matuity value aftea 3years Chy."
is38,769-)9.
(5) Pry a invest 6D0 o t the end ef evey minth
6,000
intereet
tor 4yeas with 97 ompoundreceive a Bnc
kjnal amount she
the bial will afts 4 yeas
.Tuton al
Preeent Value etunanAnnuityo
A tor EI,o0,0oo
p, chas eo fer cas h down
3yearx. fird the
and F 6,0 oope month
pice Ch te ifepaymen
cludeintert at 15, ompooncled monthIy
oBormasbl
Annity Due
in an annuity in which the payment
Annulty oue
are made at the begiing of eoch rent peviud,
the fhis tint paymant beina
now.

Aunount of an Annuiy Due of

The amount of annuty due is the value
end ol itt te m.
the annuity at te Annutty Due
fomula kor th
4 [e*if- ]a+).
Qustiong
DA banks pays nbereet gt the rate o 8/ p
moch shocá be
Com póundgl qugflely. fiod howof áh
deposited, at te végining uDter at
) At the of
begining ea Ch quarter, Rer 20o is
deposited saving account that pays &.
interest compounded uartely. Find te balance in
the atco unt at the end of 3 years

2) find the amount the end lo

lo yearS
annuily bfDe .400 payable at te beginin g
an
unti) 10 paymen G have been m&ee
e ach year
if mone WUsth . 6iecive.
3) find the amount of an annuity of 2, 0o0

begins.
Payable at the 0f ea ch moth
3years at the rate 57 Corpoundded monhty
3yeas to aeceve
9) Tulje wi she
noyu at time e
df mar iage of her only
doghter. Ho w mu ch muyt she in et atthe
tirst payent
beg innignow d andl ale ef nteret io o.
Compoun ded annually ?
)ind te carrbunt at the end of & yearst
aruity ?300 payable at he beginin g eah
yeas unti
unh8payent! have boen made A moneY
cooth 6/ om pounded annually
Sinking fond :
A sinking tond is a tond that is created boY
a ccamulotin g a specific sum of money, to be ueed
at some tuture d egi ghated odate, bd paying thryl
egulan eipual payment at ompound interept
Amount accumlated o Sinking fund!
I ReA be the money set 2ade fo eoch pay met
and os be he accumulalod uhm afte npeioda ot
tue rate T pe petiod than

payment are made at tne end

each peuod
(2)S=
the paymento ate made at ne beging
each peucd.
Quetrg:
Lompany etablishe a Sin kinq und to price
tor tne payrnent of a ,oo,
,00, o0o debt metiinq in
years- Contributio ns to the tund are to be mode
lO
at the ehd et every year, Find te amount of
eGch annual deposit p intere t io &7. per annum.
machinae coste 65,00Oand it effestveife
agtimated t be 8 ears- At hat ti it jll bgie
Solvage valueof 5Qoo.
5, e0.
)A (ompany sete ide a sum o 45,00
annually for 9year to pay
e, tS, 00,0 o0 . 7 tho fond atc umulat el at 67p-d
tind te cuplu afte ull redemption of he
debentue 1SSue
3) A sinking fond ceated for the gedemption
o * 5,00, 00 0 at te end ot 25yea1!
e, debentue o*
mvch me nc4 shovld be poided out A Pote
each year to the cinking tul , if the invstment
at 42 compounded yeorly?
interest
send his son kor higher ctudies
4) Irhan plan toto send
abooad ate 4yeods He exp ect te wst of shudies
to be 6,00, o00. How much should he set
asice at te end ef each six montv fo 4
yeax to accu mulate th ano unt i
5 money
lompounclood haly yeo ly
Amoxtizatien (EMz)
sete f inberut io lausl to be
AA loan wit a fxed tue inte reg t
intereg
both tue pin d pal ancl
amortt seol i ingtalmento at
ce of egal
are padg by a segu en
rOgulaa inte nal e tie
When a Lo an ob p o takn at a
pesiode, we wil| be interest
i pe pouo d
value of payment 4
want to
amorti zatien (EMI) probleme, we

payment A, that afaa n euo ds

detesmine te qmount f
time, at dhe rat i eioos gies a preuent
he loan, P, ie, we

value olhind to tue amount e

nee d to
 Balance tereyt
#Plat Itereat Rate & Radu ing
Rate
Flat ILnterut Rate Rdaung Balare Itvst
ntorut
A Hat Interert rede is I redu ing ratu, the
when the interet iS rate is alnad andnot
io baned
rate
calculated Hhat totaldiminishing
otsnding ban
ban amount
amount sanctioed en the
On

Principal
Hat rate
rotu olet tu
calculatio reeulte Radu uing interut
intereat rate Jelecdive
In a highe
eaivalenie
Calulatg a fat iterut
a
tan Forula
much iple
iteret rate
redu ing A=
foomula:
Total Anout P+ PyNXR J

EMI Amount
(AJ PxNxR
NX2
 to amorth2a
) Find the annual patment neehany
a delot e! es 5,000 with inteseot at 47 in

12 yeats
lasd tar 59 oo0
a) A
A buildea pus chag a pieu
to be a mov tized ov r 3 yeae at 67 pu yea
ompoundlad Monthy How mud wnll eack mon thly
Pagment be

3) A swn Gf t 50, o00 to be repaid

yeas peiod though egual ingtal mt macde at he
end of gean an interest rate 87 p yean
the wpaud balane &itarut calutàtos
n changed
ae madde t at the
tH end
end dlotesmine the
each gaas, deterure
manti
each ing tal tnat le woan
amortizod at the n 5 yeas Vity the
ditplaying the amosti zatin schadule.
rag ult by
Lo

4) A develope pucharea a piece land tor Re l,ogo00

a

to be amortiZed ove
two yea at 97 pe yeu
How much will each monthly paynut
o mpounded mon thly
be 9

) A loan f 7 , o00 s to paid in 5 esual

be paid
an nual paymnt interut bang 67 p an n m
anad cizotit
com orun d interet the patnent being made afen
each pay mant o that
a gean Detemi
the loon i amorti d ot the end
the end f 5 year Verdy
splay ing the amoh 2ati on seheslute.
the reuut by oli
bomowed Re &o, o00
a bat to em a
trom
6) Jagt houe. he bank
binance the puahare
jte oest at a Tate pu yea n

chargui
the tpaid balana, it inte rut computation madea
at the end eah nonth He agred to
tne loan in iyual monday instalme nt orer 8o
Haw mu inbe nepaid at the ond?
&hould eada payment be s the loan