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Simple Interest – Formula Definition Examples

Simple Interest – Formula Definition Examples – Learn Maths by Ankit Mahajan for SuccessCDs Education. This online Maths lesson explains about Simple Interest, examples of Simple Interest Problems and way to calculate the Simple interest. Check out other Maths lessons by Ankit Mahajan

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Principal – Money borrowed from a lender is known as principal or sum.

Interest — Additional money paid by the borrower to the lender for having used his money.

Amount — The total money which the borrower pays back to the lender at the end of the specified period.

It follows from the above definitions that

Amount = Principal + Interest

Or A = P + I

Simple Interest

The Interest calculated uniformly on the original principal throughout the loan period.

If, P is the Principal and R is the Interest Rate % per annum, then

Interest on Rs. 100 for 1 year is = Rs. R

Interest on Re. 1 for 1 year is = R 100
Interest on Re. 1 for T years is = R x T 100
Interest on Rs. P for T years is = P x R x T 100

This is formula for Simple Interest where P is a Principal, R is Rate of Interest per annum and T is Time Period.

Ques 1. Sum of Rs. 800 is lend for 1 year at the rate of 18% per annum, find the interest.


P = Rs. 800, R = 18%, T = 1 year

Interest = P x R x T 100

Interest = 800 x 18x 1 100
Interest = Rs. 144

Therefore, Simple Interest paid is Rs. 144.

Ques 2. Satish borrowed Rs. 400 from his friend @12 % per annum for 2 and half years. Find the interest and amount paid by him.


P = Rs. 400, R = 12%, T = 5 years 2
Interest = P x R x T 100
Interest = 400 x 12x 5 100 x 2
Interest = Rs. 120

Therefore, Simple Interest paid is Rs. 120.

Amount paid by Mr. Satish = 400 + 120 = Rs. 520.

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