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
If ₹12,800 is invested in a bank for 5 years at the rate of 9% per annum simple interest. what amount is returned by the bank?
Somu has borrowed ₹10,000 from a money lender with simple interest at a rate of 7% half yearly. How much amount will he pay to the money lender after 3 years?
Find the Simple interest on Rs. 2,400 from 20 March 2019 to 31 may 2019 at \(6{1 \over 4}\) % rate?
If the simple interest for five years is equal is 35% of the principal, that rate of interest is:
A sum fetched a simple interest of Rs. 3,040 at the rate of 8% p.a in 5 years. what is the sum?
