7th Class Mathematics Simple and Compound Interest Simple Interest

Simple Interest

Category : 7th Class

*     Simple Interest                

 

In the case of simple interest, we calculate interest paid by borrower over certain period of time without changing its principle.  

 

 

               

 

Calculate the simple interest on a sum of $1200 at the rate of 5 % per annum or two years.                

Solution:                

The following steps are to be followed                

Step 1: The interest for first year when                

P =$ 1200, R = 5 % and T = 1 year                

S.I. \[=\frac{P\times R\times T}{100}=\frac{1200\times 5\times 1}{100}=\$60\]                

Therefore, interest for the first year is $ 60.                                

Step 2: Interest for the second year                

P = $ 1200, R = 5 % and T = 1 year                

S.I. \[=\frac{P\times R\times T}{100}=\frac{1200\times 5\times 1}{100}=\$60\]                

Therefore, interest for the second year is $60.                

Total interest paid by borrower after 2 years =$ 60 + $ 60 = $ 120.  

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