# 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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