simple interest and compound interest video is used to solve the sums in easy and quickly.

1. Simple interest & compound
interest
By
Bharath kumar vemaluri
Assoc.prof for aptitude
Kavali.

2. Simple interest:
The money paid by the borrower to the lender
for the use of money lent is called ‘INTEREST’.
The sum lent is called ‘PRINCIPLE’
Simple interest S.I. = (PxNxR)/100
P = Principle
N = Number of years
R = Rate % p.a,
Amount = Principal + S.I

3. Examples:
 Find the simple interest on Rs. 11,000 for 5 years at 8%
p.a. ?
Sol: S.I. = (11000X5X8)/100 =4400
 Satish borrowed Rs. 5,000 from a bank at 18% p.a.
find the amount to be paid by him after 2 years 6
months ?
Sol: S.I = 5000 x 5/2 X18/100 =2250
Amount = P + S.I. = 5,000 + 2,250
= Rs. 7,250

4. Mr. Govind lent Rs. 1800 to Mr. Khan for 3 years and Rs. 3300 to
Mr. Mukund for 2 years and he received Rs. 480 as simple interest in
all. What is the rate of interest per annum?
Sol: S.I. obtained by Mr. Govind
= (1800X3XR)/100 + (3300X2XR)/100
= 54 R + 66 R = 120 R = Rs. 480
R = 4% p.a.
A certain sum of money is invested by Mr. Gopal at 7% p.a. after 4
years. However he would get Rs. 520 more simple interest, if he
invest the same sum a t6% p.a. for 9 years. What is the sum?
Sol: The difference between S.I. obtained in two cases is Rs.520
( PX9X6)/100 – (PX4X7)/100= 520
54P-28P=52000
26P=52000
p=52000/26 = 2000

5.  In how many years will a sum of money become five
times at 20% p.a. simple interest?
Sol: Here Amount = 5P…………….(A=P+4P=5P)
S.I. = 4P
4P = (PXNX20)/100
=> N = 20 years

6. Note:
 in S.I the interest remains constant or is same for
every year.
 in S.I the interest percentages over the year can
be added.
 in C.I the interest percentages over the years are
to be multiplied individually.

7. Compound interest:
 Calculate the C.I 0n 10000 at 20% per annum
after 2 years. The interest being compounded
annually?
soln: p=10000
T=2 years
R%=20%
amount=10000X1.2X1.2=12400
C.I=12400-10000 = 2400

8. Calculate the C.I on 10000 at 10% per annum after 1.5
years the interest being compounded halfyearly?
Soln:
p= 10000
T=1.5 years (6 months+ 6 months+ 6 months)
R%=10% ,so for six months 5%
Amount= 10000X1.05x1.05X1.05=11576.25
C.I= amount-principle=11576.25-10000=1576.25.
 Arun deposited 8000 in HDFC bank which pays him 12%
per annum for 12 months . the interest being
compounded quarterly . find the amount?
Soln: principle=8000
Time =1 year (3m+3m+3m+3m) quarter= 3 months.
rate= 12% ,so 3% for every quarter
amount= 8000X1.03X1.03X1.03X1.03 =9004.07

9. The difference between C.I & S.I on a certain sum of
money after 3 years,20% per annum is 2560. find the sum?
soln: p= y
T= 3 years
R=20%
Difference between c.i and s.i is 2560,
1.2X1.2X1.2X Y – 1.6 y=2560
1.728y-1.6y=2560
0.128y= 2560
y=20000/-(sum)

10.  A sum of money becomes 4 times in 10 years . in how many years
will it become 64 times on C.I?
soln: *4 *4 *4
X…………………..4X……………………16X…………………..64X
10 yrs 10 yrs 10 yrs
so 30 years.