¤ Interest is the additional money paid for the usage of a certain amount.
¤ The amount borrowed is called the principal.
¤ The sum of interest and principal is called the amount.
If the interest is calculated on same amount of money it is called the simple interest (S.I.).
Simple Interest will be the same for all the years.
If P is the principal, R is the rate of interest, T is time and S.I. the simple interest, then
Note: Simple interest is always calculated on principal. Therefore simple interest is equal for every period.
e.g: 1. What would be the simple interest obtained on an a amount of Rs. 6850 at the rate of 6 p.c.p.a. after 3 years?
(A) Rs. 2423 (B) Rs. 1233 (C) Rs. 1633 (D) Rs. 1525 (E) None of these
Sol: Here P = Rs. 6850, T= 3 years and R = 6%
Hence answer is (B)
2. How long will it take for Rs. 1250 to become Rs. 1600 at 7% per annum simple interest?
(A) 5 years (B) 3 years (C) 4 years (D) 6 years (E) None of these
e.g: What is the compound interest accrued on an amount of Rs. 8000, at the rate of 6%
p.a. at the end of 2 years?
(A) Rs.2545 (B) Rs.2,257.20 (C) Rs.2986 (D) Rs.2775.40 (E) None of these
Shortcut: Amount = 106% of 106% 8000 = 8988.80
C.I. = 8988.80 - 8000 = Rs. 988.80
Note: 1. If the interest is paid half yearly, time is doubled and the rate is halved.
2. If the interest is paid quarterly, time becomes 4 times and the rate becomes onefourth
e.g: What is the interest accrued on Rs.12000 for one and half year at 4% p.a. compounded
Difference between Simple and Compound Interest
Difference between Simple Interest and Compound Interest can be calculated by using
There is no difference between Simple and Compound Interest for one year. For 2 years
e.g: 1. What is the difference between Simple and Compound Interest for two years
on Rs. 24000 at 7% rate?
= Rs. 117.60
2. On what sum does the difference between Simple and Compound Interest for 3 years
at 5% rate will be Rs. 244?
1. What would be the simple interest obtained on an amount of Rs.48640 at the rate of 6 p.c.p.a. after 2 years?
A) Rs.5208.60 B) Rs.5802.70 C) Rs.5836.80 D) Rs.5928.60
2. The simple interest accrued on an amount of Rs.26540 at the end of 5 years is Rs.3981. What is the rate of interest?
A) 3% B) 8% C) 6% D) 4%
3. The rate of simple interest for which a sum of money becomes 5 times in 8 years is.... (SSC-CGL 2016)
A) 30% B) 40% C) 50% D) 55%
4. A certain sum of money becomes Rs.950 in a span of 3 years and further to Rs.1550 in the span of 7 years at the same rate of simple interest. What would be the amount at the end of 10 years? (in Rs.)
A) 1900 B) 1750 C) 2150 D) 2000
5. A certain sum of money amounts to Rs.918 in 2 years and Rs.969 in 3.5 years at simple interest. What is the rate of interest? (SSC-CGL 2017)
A) 4% B) 5% C) 6% D) 8%
6. A sum of money invested at compound interest amounts to Rs.1664 at the end of first years and Rs.1730.56 at the end of second year. Find the rate of interest?
A) 6% B) 5% C) 7% D) 4%
7. What is the compound interest on a sum of Rs.12000 for 2 5/8 years at 8% p.a, when the interest is compounded annually? (Nearest to a rupee) (SSC-CGL 2019)
A) Rs.2712 B) Rs.2642 C) Rs.2697 D) Rs.2654
8. The Simple Interest on a sum of Rs.50000 at the end of two years is Rs.4000. What would be the compound interest on the same sum at the same rate for the same period (in Rs.) (SSC-CGL – 2019)
A) 8000 B) 4080 C) 4040 D) 4008
9. A person lent Rs.10000 to B for 3 years and Rs.6000 to C for 4 years on simple interest at same rate of interest and received Rs.5400 in all from both of them as interest. What is the rate of interest? (SSC-CGL 2017)
A) 10% B) 12.5% C) 15% D) 20%
10. A sum of money amounts to Rs.1984 in 3 years at a simple interest. If the rate of interest is raised by 25%, the sum amounts to Rs.2080 during the same period. Find the rate of interest?
A) 6% B) 8% C) 5% D) 3%
11. A person lent certain sum of money at 5% per annum simple interest and in 15 years the interest amounted to Rs.250 less than the sum lent. What was the sum lent? (in Rs.) (SSC-CGL 2017)
A) 1000 B) 1500 C) 2400 D) 3000
12. On what sum does the difference between Simple Interest and Compound Interest for 3 years at 5% rate be Rs.549?
A) Rs.56000 B) Rs.24000 C) Rs.72000 D) Rs.32000
13. When two equal amounts are deposited for 5 years and 3 years at the rate of 7% and 9% per annum respectively and the difference of their simple interest is Rs.475. Then find the deposited amount? (SSC-CGL 2019)
A) Rs.5837.50 B) Rs.6037.50 C) Rs.5992.50 D) Rs.5937.50
14. A certain sum of money triples itself in 5 years at simple interest. In how many years it will be five times? (SSC-CGL 2017)
A) 5 B) 8 C) 10 D) 15
15. A certain sum of money invested at compound interest doubles in 3 years. In how many years will it become 6 times itself?
A) 3 B) 6 C) 8 D) 4
ANSWERS: 1-C; 2-A; 3-C; 4-D; 5-A; 6-D; 7-C; 8-B; 9-A; 10-B; 11-A; 12-C; 13-D; 14-C; 15-B.