Simple Interest : Important Terms, Formula and Shortcuts

simple interest formula

Simple Interest is an important topic to deal with under Quantitative Aptitude, If you are preparing for any competitive exams.

Now let's start the lesson !

When a person borrows some amount from another person or bank,then the borrower pays some extra money during repayment,that extra money paid by borrower is called interest.

Important Terms Related To Simple Interest :

Principal (P): Money borrowed by the borrower

Amount (A): Money to be returned by the borrower.It is the sum of Principal and Interest i.e. Amount = Principal + Interest

Rate Of Interest (R): It is the rate at which interest is charged on principal.It is always specified in Percentage(%)

Time (T): Period for which the money is borrowed

Simple Interest (S.I.): If the interest is calculated on original principal for any length of time
    
simple interest = ( principal x rate of interest x time ) / 100

Installments : If the borrower paid the total amount of money in some equal parts, then it is termed as installments

Some Basic Simple Interest Formulas :

  • If amount,rate of interest and time is given,then to determine simple interest 

we use formula   S.I. = A R T / ( 100 + R T )

  • If amount,rate of interest and time is given,then to determine principal 

we use formula  P = 100 A / ( 100 + R T )

  • If rate of interest is half - yearly, Rate = ( R / 2 ) % and Time = 2 T
  • If rate of interest is monthly, Rate = ( R / 12 ) % and Time = 12 T
  • If rate of interest is quarterly, Rate = ( R / 4 ) % and Time = 4 T

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