Simple Interest Basics

🎯 Learning Objective

Compute simple interest and amount using SI = PRT/100.

💡 Concept

• SI = (P × R × T)/100 — P principal, R rate % per annum, T time in years
• Amount A = P + SI (principal plus interest)
• SI is the SAME every year — 8% for 2 years is simply 16% of P
• Time in months → divide by 12 to convert into years
• Any one unknown of P, R, T, SI can be found from the other three

🧮 Key Formulas

SI = (P × R × T)/100

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Amount = P + SI

✏️ Easy Example

Q. Find the simple interest on ₹5,000 at 8% per annum for 2 years.

1. SI = (5000 × 8 × 2)/100
2. = 50 × 16

Answer: ₹800

🇮🇳 Real-Life Example

Lend ₹10,000 to a friend at 12% p.a. simple — that is a flat ₹1,200 a year, or ₹100 every month, year after year.

📝 Exam-Level Example

Q. A sum of ₹7,500 is borrowed at 12% per annum simple interest. Find the amount to be repaid after 3 years.

1. SI = (7500 × 12 × 3)/100 = 2700
2. Amount = 7500 + 2700

Answer: ₹10,200

📝 Exam-Level Example

Q. The simple interest on a sum at 10% per annum for 4 years is ₹1,200. Find the sum.

1. SI = P × 40/100 = 0.4P
2. 0.4P = 1200
3. P = 1200 ÷ 0.4

Answer: ₹3,000

🪄 Memory Trick

R × T first! 8% for 2 years = 16%, 12% for 3 years = 36%. Then take that one % of P — single step.

⚠️ Common Mistakes

• ❌ Using time in months directly without converting to years
• ❌ Reporting SI when the question asks for Amount (P + SI)
• ❌ Multiplying by R/100 twice

🏆 Exam Tips

• ✅ Combine R × T into a single percentage before calculating
• ✅ In SI, interest for each year is identical — use it to split or scale time easily

📌 Summary

• SI = PRT/100; Amount = P + SI
• SI is equal every single year
• Months ÷ 12 = years
• R × T as one % of P is the fastest route