CBSE Class 7 Mathematics – 12. Simple Interest (Notes)

 

Simple Interest

The interest that is calculated on the initial sum borrowed or deposited amount is called simple interest.

The money which we borrow is called the Principal.

The money which we have to pay on principal is called interest.

At the end of year the return money with interest is called Amount.

Amount = Principal + interest

Where,

SI = Simple interest

P = Principal

R = Rate of Interest

T = time period

Example

Sunita borrows a loan of Rs 5,0000 at 15% per year as the rate of interest. Find the interest she has to pay at end of one year.

Solution

Total amount to be paid by Sunita at the end of one year = Rs.50000 + Rs. 7500 = Rs.57500.

Interest for multiple years

If we have to calculate the interest for more than one year then we have to change the time period only.

Example

In the above example if Sunita takes the loan for 3 years then what will be the total amount after 3 years?

Solution

Total amount to be paid by Sunita at the end of 3 years = Rs.50000 + Rs. 22500 = Rs.72500.