Simple interest & compound interest By Bharath kumar vemaluri Assoc.prof for aptitude Kavali.
Simple interest:The money paid by the borrower to the lender for the use of money lent is called ‘INTEREST’.The sum lent is called ‘PRINCIPLE’Simple interest S.I. = (PxNxR)/100P = PrincipleN = Number of yearsR = Rate % p.a,Amount = Principal + S.I
Examples: Find the simple interest on Rs. 11,000 for 5 years at 8% p.a. ? Sol: S.I. = (11000X5X8)/100 =4400 Satish borrowed Rs. 5,000 from a bank at 18% p.a. find the amount to be paid by him after 2 years 6 months ? Sol: S.I = 5000 x 5/2 X18/100 =2250 Amount = P + S.I. = 5,000 + 2,250 = Rs. 7,250
Mr. Govind lent Rs. 1800 to Mr. Khan for 3 years and Rs. 3300 toMr. Mukund for 2 years and he received Rs. 480 as simple interest inall. What is the rate of interest per annum?Sol: S.I. obtained by Mr. Govind = (1800X3XR)/100 + (3300X2XR)/100 = 54 R + 66 R = 120 R = Rs. 480 R = 4% p.a.A certain sum of money is invested by Mr. Gopal at 7% p.a. after 4years. However he would get Rs. 520 more simple interest, if heinvest the same sum a t6% p.a. for 9 years. What is the sum?Sol: The difference between S.I. obtained in two cases is Rs.520 ( PX9X6)/100 – (PX4X7)/100= 520 54P-28P=52000 26P=52000 p=52000/26 = 2000
In how many years will a sum of money become fivetimes at 20% p.a. simple interest?Sol: Here Amount = 5P…………….(A=P+4P=5P) S.I. = 4P 4P = (PXNX20)/100 => N = 20 years
Note: in S.I the interest remains constant or is same forevery year. in S.I the interest percentages over the year canbe added. in C.I the interest percentages over the years areto be multiplied individually.
Compound interest: Calculate the C.I 0n 10000 at 20% per annum after 2 years. The interest being compounded annually? soln: p=10000 T=2 years R%=20% amount=10000X1.2X1.2=12400 C.I=12400-10000 = 2400
Calculate the C.I on 10000 at 10% per annum after 1.5years the interest being compounded halfyearly?Soln: p= 10000 T=1.5 years (6 months+ 6 months+ 6 months) R%=10% ,so for six months 5%Amount= 10000X1.05x1.05X1.05=11576.25C.I= amount-principle=11576.25-10000=1576.25. Arun deposited 8000 in HDFC bank which pays him 12%per annum for 12 months . the interest beingcompounded quarterly . find the amount?Soln: principle=8000 Time =1 year (3m+3m+3m+3m) quarter= 3 months. rate= 12% ,so 3% for every quarter amount= 8000X1.03X1.03X1.03X1.03 =9004.07
The difference between C.I & S.I on a certain sum ofmoney after 3 years,20% per annum is 2560. find the sum?soln: p= y T= 3 years R=20%Difference between c.i and s.i is 2560,1.2X1.2X1.2X Y – 1.6 y=25601.728y-1.6y=25600.128y= 2560 y=20000/-(sum)
A sum of money becomes 4 times in 10 years . in how many yearswill it become 64 times on C.I? soln: *4 *4 *4 X…………………..4X……………………16X…………………..64X 10 yrs 10 yrs 10 yrs so 30 years.
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simple interest and compound interest video is used to solve the sums in easy and quickly.