Comparing Quantities of Class 7
The money borrowed or lent out for a certain period of time is called the principal or sum.
Interest : The additional money paid by the borrower in lieu of the money used by him is called interest. Amount :The total money paid back to the lender is called amount.
Amount = Principal + Interest
Rate :Interest on Rs. 100 for 1 year is called rate per cent per annum (abbreviated as rate % p.a.) Thus, if rate = 9% per annum, then it means that the interest on Rs. 100 for 1 year is Rs. 9.
Simple Interest :If interest is reckoned uniformly on the original principal throughout the loan period then the interest is called simple interest, abbreviated as S.I.
Let Principal = Rs. P, Rate = R% per annum and Time = T years.
Then, we have