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Simple Interest and Compound Interest

Simple Interest and Compound Interest

# Examples

#1

Find the simple interest, If

1. P = Rs.1000, R = 20% per annum, T = 4 years.
2. P = Rs.600, R = 5% per annum, T = 4 months.
3. P = Rs.200, R = 6% per six months, T = 3 years.
4. P = Rs.500, R = 2% per six months, T = 5/2 years.
5. P = Rs.400, R = 3% per three months, T = 2 months.
6. P = Rs.730, R = 10% per annum, T = 120 days.
7. P = Rs. 3000, R = 61/4 per annum, T = period from 4th Feb to 18th Apr.
# Solution
1. 42010 800

2. 25 = 10

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3. 6232 = 72

4. 525=50

5. 42=8

6. 73/3=24

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7. 37.50

#2
Find the following:
1. P = Rs. 100, R = 3% per annum, T = 2 year, A= ?
2. P = Rs. 500, R = 6% per annum, T = 4 months, A= ?
3. P = Rs. 400, R = 3.65% per annum, T = 150 days, A= ?
4. A = Rs. 540, S.I = Rs. 108 , R = 5%, T = ?
5. A = Rs. 1,120, R = 5%, T = 22/5 yr, S.I = ?

# Solution:
1. S.I = 6 ; A = S.I + principal ; A = 6 + 100 106

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2. S.I = 10 ; A = S.I + P ; A = 10+500 510

3. S.I = 6 ; A = 400 + 6 406

4. T = 5 yr.

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5. 120

#3
1. A sum of money lent out at simple interest amounts to Rs. 720 after 2 years and to
Rs. 1020 after a further period of 5 years. Find the sum and the rate %.
2. Adam borrowed some money at the rate of 6% p.a. for the first two years, at the
rate of 9% p.a. for the next three years, and at the rate of 14% p.a. for the period
beyond five years. If he pays a total interest of Rs. 11,400 at the end of nine years ,
how much money did he borrow ?(Bank P.O 1999)

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3. A person borrows Rs. 5000 for 2 years at 4% p.a. simple interest. He immediately
lends it to another person at 61/4% p.a. for 2 years. Find his gain in the transaction
per year.(S.S.C.2000)
4. A certain sum of money amounts to Rs. 1008 in 2 years and to Rs. 1164 in 31/2
years.Find the sum and the rate of interest?
5. The simple interest on a certain sum of money for 21/2 years at 12% per annum is
Rs. 40 less than the simple interest on the same sum for 31/2 years at 10%
per annum. Find the sum.

# Solution
1. Principal = 600, R = 10%

2. 12000

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3. 112.50

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4. [ 1164-1008 = 156 ] 156/34 = 208 ; R = 208/2800100 13

5. /20 - 3x/10 = 40 x = ( 40 20 ) x = 800 [ Hint : Given Below ]
7x

# COMPOUND INTEREST
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# Formulas

Case 1. When interest is not Compound yearly,

Amount after 't' years A = P [1+ r/n100]nt
n= no of compounding per year
When interest is compounded half yearly, n = 2
compounded quarterly, n = 4
compounded monthly, n = 12

Case 2. When rate % is no equal every year and interest is compounded yearly
Basic formula :
P [1+ r/100] [1+ r/100] ...upto 't' times

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But as rate % is not same every year, so

A = P [1+ r1/100]t1 [1+ r2/100]t2 .... and so on
Where R1 = Rate% p.a. for t1 years. and R2 = Rate % p.a. for t2 years.
Case 3 When interest is compounded yearly but time is in fraction
T = 53/4 years
A= (whole part) (fraction part of time )
A = P [1+ r/100]5 [1+ 3r/4/100]

# Difference between Compound Interest and Simple Interest

CI - SI = P [ R/100 ]2
When time t = 3 years
CI - SI = P [ (R/1003 +3 (R/100)2]

# Examples
#1
If the compound interest on a certain sum for two years at 10% p.a. is Rs 2,100
the simple interest on it at the same rate for two years will be. ( RRB, 2009)

The compound interest on a sum for 2 years is Rs. 832 and the simple interest on
the same sum for the same period is Rs. 800. The difference between the
compound and simple interest for 3 years will be.

The difference between simple interest and compound interest on a sum for 2
years at 8% when the interest is compounded annually is Rs. 16, if the interest
were compounded half yearly, the difference in one interest would be nearly.

The difference in C.I and S.I for 2 years on a sum of money is Rs. 160.If the S.I for
2 years be Rs. 2880, the rate of percent is .

# Solution

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Simple Interest and Compound Interest

1. 2000

2. 98.56

3. 04

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4.

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