What will be the simple interest on a principal of Rs. 2400 for 6 years at the rate of 8 percent per annum?
Rs. 1152
Calculating Simple Interest
Simple interest is a quick and easy method of calculating the interest charge on a loan or investment. It is determined by multiplying the principal amount by the interest rate and the time period.
Understanding the Simple Interest Formula
The formula used to calculate simple interest is:
$$ \text{Simple Interest (SI)} = \frac{\text{Principal (P)} \times \text{Rate (R)} \times \text{Time (T)}}{100} $$
Where:
- Principal (P): The initial amount of money borrowed or invested.
- Rate (R): The annual interest rate (in percent).
- Time (T): The duration for which the money is borrowed or invested (in years).
Applying the Formula to the Given Problem
In this problem, we are given the following information:
- Principal (P) = Rs. 2400
- Rate (R) = 8 percent per annum
- Time (T) = 6 years
Now, let's substitute these values into the simple interest formula:
$$ \text{SI} = \frac{2400 \times 8 \times 6}{100} $$
Step-by-Step Simple Interest Calculation
Let's perform the calculation:
- Multiply the Principal, Rate, and Time: $2400 \times 8 \times 6$
- $2400 \times 8 = 19200$
- $19200 \times 6 = 115200$
- Divide the result by 100: $\frac{115200}{100}$
- $$ \text{SI} = 1152 $$
So, the simple interest on Rs. 2400 for 6 years at 8 percent per annum is Rs. 1152.
Summary of Simple Interest Calculation
| Parameter | Value |
|---|---|
| Principal (P) | Rs. 2400 |
| Rate (R) | 8% |
| Time (T) | 6 years |
| Simple Interest (SI) | Rs. 1152 |
The calculated simple interest amount is Rs. 1152.
Revision Table: Key Concepts of Simple Interest
| Term | Definition | Formula Component |
|---|---|---|
| Principal | The initial sum of money | P |
| Rate | Annual percentage at which interest is charged/earned | R |
| Time | Duration for which money is borrowed/invested (in years) | T |
| Simple Interest | Interest calculated only on the principal amount | SI |
| Amount | Principal + Simple Interest | A = P + SI |
Additional Information on Interest Calculations
While simple interest is straightforward, another common method is compound interest. Compound interest is calculated on the initial principal and also on the accumulated interest of previous periods. This means that compound interest grows faster than simple interest over time, especially for longer periods.
Understanding the difference between simple and compound interest is crucial for financial planning, whether it's for savings, loans, or investments. Simple interest is often used for short-term loans, while compound interest is more common for savings accounts, fixed deposits, and longer-term loans like mortgages.
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?
