Academic Year 2024-25
Grade : MYP 3
Unit 1 : Numerical and Abstract Reasoning (Numbers)
Key concept : Form
Related concept(s) : Simplification, Representation
Global context : Orientation in space and time
Global Context Exploration : Human discoveries and developments.
SOI : Representing and simplifying entities in different forms can
help explore remarkable discoveries and development.
Topic : Simple and Compound Interest
Inquiry Questions:
Factual -
• Why variation is important to understand discoveries and developments?
• Which factors do we need to consider to represent human discoveries in simplified
form?
Conceptual -
• How do time and space help to know the form of discoveries?
• How the presentation of discoveries in different forms helps to understand human
development.
Debatable -
• To what extent do representation and simplification help to understand form?
Let us understand the difference between the amount earned through compound interest
and simple interest on a certain amount of money, say Rs. 100 in 3 years, and the rate of
interest is 10% p.a.
Below table shows the process of calculating interest and total amount.
Simple and Compound Interest
Money is said to be lent at compound interest when at the end of a year or other fixed
period, the interest that has become due is not paid to the lender, but is added to the sum
lent, and the amount thus obtained becomes the principal in the next year or period. The
process is repeated until the amount for the last period has been found. Hence, When the
interest charged after a certain specified time period is added to form new principal for the
next time period, the interest is said to be compounded and the total interest accurse is
compounded and the total interest accrued is compound interest.
𝑟
• Compound Interest (C.I.) = p [(1 + )𝑛 − 1]
100
𝑟
• Amount (A) = p (1 + )𝑛
100
Where ‘n’ is number of time period.
Example 1:
Find the amount to be paid back on a loan of 18,000 at 5.5% per annum for 3 years.
Solution:
Example 2:
Determine in how many years will a sum of money triple itself, at 25% per annum
simple interest.
Solution:
Example 3:
What rate per cent annum will produce 250 as simple interest on 6000 in 2.5 years.
Solution:
Example 4:
Jay invested 10000 Rs for 5 years at simple interest. At the end of five years, he had a total
amount of Rs. 15000. Find the rate of interest at which Jay had invested the money.
Solution:
P = 10000, T = 5, A = 15000
We can get the interest amount by using the formula for the total amount.
A = P + SI
15000 = 10000 + SI
SI = 15000 – 10000
SI = 5000
Now, by putting SI = 5000 in the formula of simple interest, we can get the rate of interest.
𝑃𝑇𝑅
SI =
100
10000 ×5 ×𝑅
5000 =
100
5000 ×100
R=
10000
R = 10 %
Therefore, Jay had invested the money at 10% simple interest.
Example 5:
If 60000 compounded annually amounts to 68694 in 2 then find the rate of interest.
Solution:
Example 6:
In how many years, the sum of 10000 will become 10920.25 if the rate of compound interest
is 4.5 % per annum?
Solution:
A = 10920.25, P = 10000, R = 4,5 % , n= ?
𝑟
A = P (1 + )𝑛
100
4.5 𝑛
10920.25 = 10000 × (1 + )
100
10920.25
= (1 + 0.045)𝑛
10000
1.092025 = (1.045)𝑛
(1.045)2 = 1.092025
Therefore,
(1.045)𝑛 = (1.045)2
n=2
Therefore, after 2 years the sum of 10000 will become 10920.25 if the rate of compound
interest is 4.5 % per annum.
Compound Interest – When interest is calculated half-yearly
Since ‘r’ is calculated half-yearly therefore the rate per cent will become half and the time
will become twice. Therefore,
𝑟
Rate per cent when interest is paid half-yearly = % and
2
Time period= 2 × time given in years.
Hence,
𝑟
A = P (1 + )2𝑛
2 × 100
Example 7:
What will be the compound interest on 4000 in 4 years at 8 per cent annum. If the interest
is calculated half-yearly.
Solution:
P = 4000, r = 8 %, n = 4 years
Since interest is calculated half-yearly, therefore
8
r= % and n = 4 × 2 = 8 half years.
2
4
A = 4000 × (1 + )8
100
A = 4000 × 1.3685
A = 5474.2762
Interest = Amount – Principal
Interest = 5474.2762 – 4000 = 1474.2762
Interest = 1474.28
Example 8:
To apply for higher studies Nita needs to take a loan from the bank. She is checking the
various options available. Help Nita by solving the following tasks.
[1] Calculate the amount and interest that Nita will need to pay after 5 years, if she takes
the loan of 500000 rupee, with the rate of interest of 8% compounded annually.
[2] Find the principal amount that Nita has pay if rate of interest compounded annually is
10%, total amount that she has to pay to the bank is 5,85,640 rupees for the period of
4 years.
[3] Determine the rate of interest if she receives 350000 rupee and the total amount Nita
has to pay after 2 years is 4,23,500.
[4] Nita takes a loan of 200000 rupee, compounded annually at the rate of 10 %. Show
that she will be able to pay the total amount of 242000 in less than 2 years.
[5] If bank gives Nita an initial amount of 300000 rupee at the interest of 8 % compounded
half yearly, estimate the amount that Nita will need to pay after 3 years.
Resources:
Physicscatalyst. CBSE Notes for Class 6 Maths Chapter 2: Whole Numbers,
physicscatalyst.com/class- 6/class6_maths_whole_numbers.php.
Admin. “Integers Class 6 Notes With Examples and Practice Questions.” BYJUS,
Byju's, 2 Jan. 2019, byjus.com/cbse-notes/cbse-class-6- maths-notes-chapter-6-
integers/.
Estela, Mike. “Division of Integers.” ChiliMath, 20 Jan. 2020,
www.chilimath.com/lessons/introductory-algebra/division-of-integers
“Integers - Definition, Properties, Examples of Integers.” Cuemath,
www.cuemath.com/numbers/integers/.
