Simple interest formula
Commercial Mathematics of Class 8
When someone lends money to someone else, the borrower usually pays a fee to the lender. This fee is called 'interest'. 'Simple' interest, or 'flat rate' interest. The amount of simple interest paid each year is a fixed percentage of the amount borrowed or lent at the start.
The simple interest formula is as follows:
Interest = Principal × Rate × Time
where:
'Interest' is the total amount of interest paid,
'Principal' is the amount lent or borrowed,
'Rate' is the percentage of the principal charged as interest each year. The rate is expressed as a decimal fraction, so percentages must be divided by 100. For example, if the rate is 15%, then use 15/100 or 0.15 in the formula.
'Time' is the time in years of the loan.
The simple interest formula is often abbreviated in this form:
I = P R T
Three other variations of this formula are used to find P, R and T:
Simple interest problems can involve lending or borrowing. In both cases the same formulas are used.
Whenever money is borrowed, the total amount to be paid back equals the principal borrowed plus the interest charge:
total repayments = ( principal + interest )
Usually the money is paid back in regular instalments, either monthly or weekly. To calculate the regular payment amount, you divide the total amount to be repaid by the number of months ( or weeks ) of the loan. Like this:
OR
To convert the loan period, 'T', from years to months, you multiply it by 12, since there are 12 months in a year. Or, to convert 'T' to weeks, you multiply by 52, because there are 52 weeks in a year.
question 1. A student purchases a computer by obtaining a simple interest loan. The computer costs Rs.15000, and the interest rate on the loan is 12%. If the loan is to be paid back in weekly instalments over 2 years, calculate:
- 1. The amount of interest paid over the 2 years,
- 2. The total amount to be paid back,
- 3. The weekly payment amount.
Solution: Principal: 'P' = Rs.15000, Interest rate: 'R' = 12% = 0.12, repayment time: 'T' = 2 years
Part 1: Find the amount of interest paid.
interest: 'I' = PRT
= 15000 × 0.12 × 2
= 3600
Part 2: Find the total amount to be paid back.
total repayments = principal + interest
= Rs.15000 + Rs. 3600
= Rs.18600
Part 3: Calculate the weekly payment amount
Weekly payment amounts =
= Rs.178.85 per week
CBSE NCERT Solutions for Class 8 Maths
class 8 maths NCERT solutions Chapter 1: Rational Numbers
class 8 maths NCERT solutions Chapter 2: Linear Equations in One Variable
class 8 maths NCERT solutions Chapter 3: Understanding Quadrilaterals
class 8 maths NCERT solutions Chapter 4: Practical Geometry
class 8 maths NCERT solutions Chapter 5: Data Handling
class 8 maths NCERT solutions Chapter 6: Square and Square Roots
class 8 maths NCERT solutions Chapter 7: Cube and Cube Roots
class 8 maths NCERT solutions Chapter 8: Comparing Quantities
NCERT Class 8 Maths solution Chapter 9: Algebraic Expressions and Identities
class 8 maths NCERT solutions Chapter 10: Visualizing Solid Shapes
class 8 maths NCERT solutions Chapter 11: Mensuration
class 8 maths NCERT solutions Chapter 12: Exponents and Powers
class 8 maths NCERT solutions Chapter 13: Direct and Inverse Proportions
class 8 maths NCERT solutions Chapter 14: Factorization
class 8 maths NCERT solutions Chapter 15: Introduction to Graphs
class 8 maths NCERT solutions Chapter 16: Playing with Numbers
Notes,worksheet and solved question for Maths class 8
- class 8 maths notes on chapter Liner equation in one variable
- class 8 maths notes on chapter algebric expression
- class 8 maths notes on chapter Mensuration
- class 8 maths notes on chapter Square and square roots
- class 8 maths notes on chapter statistice
- class 8 maths notes on chapter practical Geometry
- class 8 maths notes on chapter commericial maths
- class 8 maths notes on chapter solid shape
- class 8 maths notes on chapter quadrilaterals
- class 8 maths notes on chapter exponents
- class 8 maths notes on chapter factorisation
- class 8 maths notes on chapter inverse proporation
- class 8 maths notes on chapter cube and cube roots
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