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
How much time will it take for an amount of Rs. 450 to yield Rs. 81 as interest at 4.5% per annum of simple interest ?
Nirav and Mehul borrowed Rs.4000 and Rs.5000 respectively for 2.5 years at the rate of x% per annum. Mehul paid Rs 125 more interest than Nirav. Find x.
If the interest on a sum of Rs.1200 is more than the interest on Rs.1000 by Rs.120 in three years, then what is the rate of interest per annum?.
The difference between the simple interest received from two banks on Rs. 500 for two years is Rs. 2.50. What is the difference between their rates?
A sum of Rs.1200 becomes Rs.1560 at a rate of simple interest in 3 years. In how many years will the sum of Rs.800 amount to Rs.1120 at the same rate of simple interest?
