Simple Interest Definition
Principals (P):The original Sum of Money Loaned/deposited.
Interest (I):The amount of money that you pay to borrow money or the amount of money that you earn on a deposit
Time (T):The duration for which the money is borrowed/deposited.
Rate of Interest (R):the percent of interest that you pay for money borrowed, or earn for money deposited.
Formula for Calculating S.I
R- Rate of Interest (in %)
T = Time period.
Question. What is the S.I on 7500/- at the rate of 10% per annum for 6 years
Question 2. A man borrowed Rs 15000/- at the rate 24% S.I and clear debt after 6 years, how much Rs. has to return.Solution:
DefinitionInternal calculation on initial principal and also on the accumulated interest of previous periods of deposit or loan
Formula:Formula for calculation of compound interest
For Example:A took three years loan of Rs. 10000 at an interest rate of 5% that compound annually. What would be the compound interest?
|Year||Opening Balance(P)||Interest (I) 5%||Closing Balance (P+I)|
Compound Interest Payment can be made
- Monthly = 12
- Quarterly = 4
- Semi- annually= 2
- Annually = 1.
(It means I should be divided by no. of time it is compounded)
For Example:Ram invested Rs. 2000 for 2 years at the rate of 5% that is compounded annually. What will be C.I?
Taking the same example compounded Monthly
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