The interest earned on Rs. 2250 at the rate 3% simple interest per annum for 2 years will be:
Rs. 135
Calculating Simple Interest Earned
Simple interest is a type of interest that is calculated only on the principal amount. It is the easiest way to calculate interest on a loan or deposit.
The formula used to calculate simple interest is:
\( \text{Simple Interest (SI)} = \frac{\text{Principal (P)} \times \text{Rate (R)} \times \text{Time (T)}}{100} \)
Let's identify the given values from the question:
- Principal amount (P) = Rs. 2250
- Rate of interest (R) = 3% per annum
- Time period (T) = 2 years
Now, we will substitute these values into the simple interest formula:
\( \text{SI} = \frac{2250 \times 3 \times 2}{100} \)
Let's calculate the simple interest step-by-step:
- Multiply the Principal, Rate, and Time: \( 2250 \times 3 \times 2 = 2250 \times 6 = 13500 \)
- Divide the result by 100: \( \frac{13500}{100} = 135 \)
So, the simple interest earned is Rs. 135.
| Parameter | Value |
|---|---|
| Principal (P) | Rs. 2250 |
| Rate (R) | 3% per annum |
| Time (T) | 2 years |
| Simple Interest (SI) | Rs. 135 |
Therefore, the interest earned on Rs. 2250 at the rate of 3% simple interest per annum for 2 years is Rs. 135.
Revision Table: Key Concepts in Simple Interest
| Term | Definition | Formula Symbol |
|---|---|---|
| Principal | The initial amount of money borrowed or invested. | P |
| Interest Rate | The percentage at which interest is charged or earned, usually per year. | R |
| Time | The duration for which the money is borrowed or invested. | T |
| Simple Interest | Interest calculated only on the principal amount. | SI |
| Amount | The total sum of principal and interest after a certain time. | A = P + SI |
Additional Information on Interest Types
While this question deals with simple interest, it's useful to know about another common type: compound interest.
- Simple Interest: Interest is calculated only on the original principal amount. The interest earned does not get added to the principal for future calculations.
- Compound Interest: Interest is calculated on the principal amount and also on the accumulated interest from previous periods. This means the interest 'compounds' over time, leading to faster growth in the total amount compared to simple interest for the same rate and time (when time is > 1 year).
Understanding the difference between simple and compound interest is crucial for financial calculations, especially concerning savings and loans over longer periods.
Similar Questions
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Important Questions from Simple Interest
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