Computing Simple Interest

# Computing Simple Interest

• Calculation of Simple Interest
• Factors on which the Amount Depends
• Summary
• What’s Next?

In the previous segment, we had a look at Simple interest. In this segment of the chapter

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‘Comparing Quantities’, we will learn how to calculate simple interest.

## How to Calculate simple interest?

Simple interest can be calculated by the formula,

Simple interest = Principal x Rate of interest x Number of Year. For example,

Q. A man deposits ₹ 100 in a bank at a rate of 10% per annum. So what will be the amount received if the man keeps the money for one year, two years, and three years at the bank?

Solution:

Principal (Initial amount) = ₹ 100

Rate of Interest = 10% per annum

The interest amount is calculated on the original Principal only.

Simple interest for Year 1 = Principal x Rate of interest x Number of Year

= 100 × 10 × 1= ₹ 110

100

Simple interest for Year 2 = Principal x Rate of interest x Number of Year

= 100 × 10 × 2 = ₹ 120

100

Simple interest for Year 3 = Principal x Rate of interest x Number of Year

= 100 × 10 × 3 = ₹ 130

100

## Related content

 Simple Interest – Example 1 Compound Interest