What will be the simple interest on a principal of Rs. 980 for 4 years at the rate of 12 percent per annum?
Rs. 470.4
Understanding Simple Interest Calculation
Simple interest is a quick and easy method of calculating the interest charge on a loan. It is calculated only on the principal amount, using the formula:
\[ SI = \frac{P \times R \times T}{100} \]
Where:
- \(SI\) is the Simple Interest
- \(P\) is the Principal amount (the initial amount borrowed or invested)
- \(R\) is the Rate of interest per annum (in percentage)
- \(T\) is the Time period (in years)
Calculating Simple Interest for Rs. 980
In this specific problem, we are asked to find the simple interest on a principal amount of Rs. 980 for a duration of 4 years at an annual interest rate of 12 percent.
Given Information:
- Principal (\(P\)) = Rs. 980
- Rate of Interest (\(R\)) = 12% per annum
- Time Period (\(T\)) = 4 years
Step-by-Step Calculation:
Using the simple interest formula, we substitute the given values:
\[ SI = \frac{980 \times 12 \times 4}{100} \]
First, multiply the rate and time:
\[ 12 \times 4 = 48 \]
Now, multiply the principal by this result:
\[ 980 \times 48 \]
Let's perform this multiplication:
| 980 | |
|---|---|
| x | 48 |
| 7840 (980 x 8) | |
| + | 39200 (980 x 40) |
| 47040 |
So, \(980 \times 48 = 47040\).
Now, divide the result by 100:
\[ SI = \frac{47040}{100} \]
\[ SI = 470.40 \]
The simple interest is Rs. 470.40.
Final Simple Interest Amount
The calculated simple interest on a principal of Rs. 980 for 4 years at a rate of 12 percent per annum is Rs. 470.4.
Revision Table: Simple Interest Concepts
| Term | Definition | Formula Symbol |
|---|---|---|
| Principal | The initial sum of money | \(P\) |
| Rate | The percentage at which interest is charged per period | \(R\) |
| Time | The duration for which the money is borrowed/invested | \(T\) |
| Simple Interest | Interest calculated only on the principal | \(SI\) |
| Amount | Principal + Simple Interest | \(A = P + SI\) |
Additional Information on Simple Interest
Simple interest is different from compound interest. In simple interest, the interest earned in previous periods is not added to the principal for calculating interest in the current period. This makes simple interest calculations straightforward. It is often used for short-term loans or simple calculations where the compounding effect is not considered.
For example, if you borrow Rs. 1000 at 10% simple interest per annum for 2 years:
- Year 1 Interest = \(\frac{1000 \times 10 \times 1}{100}\) = Rs. 100
- Year 2 Interest = \(\frac{1000 \times 10 \times 1}{100}\) = Rs. 100
- Total Simple Interest = Rs. 100 + Rs. 100 = Rs. 200
The interest is calculated only on the initial Rs. 1000 each year.
Important Questions from Simple Interest
Anil lent a sum of Rs. 5,000 on simple interest for 10 years in such a way that the rate of interest is 6% per annum for the first 2 years, 8% per anmum for the next 2 years and 10% per annum beyond 4 years. How much interest (in Rs.) will he earn at the end of 10 years?
What will be the simple interest on a sum of Rs. 12000 at the rate of 15 percent per annum for three years ?
If in 13 years fixed sum doubles at simple interest, what will be the interest rate per year? (correct to two decimal places)
On simple interest a sum of Rs. 640 becomes Rs. 832 in 2 years. What will Rs. 860 become in 4 years at the same rate of simple interest?
A certain sum amounts to Rs. 81840 in 3 years and to Rs. 92400 in 5 years at x% p.a. under simple interest. If the rate of interest is becomes (x + 2)%, then in how many years will the same sum double itself?
