# (Online Course) CSAT Paper - II : Basic Numeracy: Simple Interest

## Basic Numeracy

## Simple Interest

## Interest

It is the sum which is paid by the borrower to the lender for using the money for a specific time period. The money borrowed is called the Principal. The rate at which the interest is calculated on the principal is called Rate of Interest. The time for which the money is borrowed is Time and the total sum of principal and interest is called the Amount.

## Simple Interest

If P = Principal, R = Rate per cent per annum T = Number of years, SI = Simple Interest and A = Amount. Then,

Here, the interest is calculated on the original principal ie, the principal to calculate the interest remains constant throughout the time period. The interest earned on the principal is not taken into account for the purpose of calculating interest for later years.

**Example 1:** Find the SI on Rs. 7200 at 8% per annum for 10 months.

**Example 3:** Three persons separately borrow Rs. 51000
in all froma banker at 10% and returned with interest after 2, 5 and 6 year
respectively. It the returned amounts are equal, what are the sums borrowed by
each of them?

**Example 4: **What annual instalment will discharge a debt of Rs. 600 due
in 3 year at 10% per annum simple interest?**Solution. **Let each instalment be Rs. x.

Clearly, first instalment will be paid after 1 year. Thismoney will be with the
lender for 2 year. Similarly, he will have Rs. x for 1 year and Rs. x at the
end.

(amount of Rs. x for 2 year) + (amount of Rs. x for 1 year Rs. x) = 6600