Important Formulas and Short Cuts on Simple Interest

Simple Interest topic plays an important role in SSC  CGL examination and around two to three questions are frequently asked  which generally range from being moderate to difficult. To help in your preparation we are providing you some useful formulas and shortcut methods so that you can quickly solve the questions in minimum amount of time.

 Simple Interest (SI)

If the interest on a sum borrowed for certain period is calculated uniformly, it is called simple interest(SI). (fix percentage of principal)

 Principal (sum)

Principal (or the sum) is the money borrowed or lent out for a certain period. It is denoted by P.

 What is Amount?

The Addition of Simple Interest and Principle is called the Amount.

A = S.I + P ( Principle )

 Interest

Interest is the extra money paid by the borrower to the owner (lender) as a form of compensation for the use of the money borrowed calculated on the basis of Principle.

 Time

This is the duration for which money is lend / borrowed.

 Rate of Interest

It is the rate at which the interest is charge on principal.

What is Per annul means?

"Rate of interest R%  per annum" means that the interest for one year on a sum. If not stated explicitly, rate of interest is assumed to be for one year.

 Formulas Need to Remember

S.I =[( P X R X T )/( 100 )].

Where P = Principle, R = Rate of per annul, T = Number of years

 From the above formula , we can derive the followings

P=(100×SI)/ RT

R=(100×SI)/ PT

T=(100×SI)/ PR

Some Tricks to Solve easily

Trick 1:

If a sum of money becomes “n” times in “T years” at simple interest, then the rate of interest per annum can be given be

Trick 2:

If an amount P1 is lent out at simple interest of R1% per annum and another amount P2 at simple interest rate of R2% per annum, then the rate of interest for the whole sum can be given by

 Trick 3: A sum of money at simple interest n1 itself in t1 year. It will become n2 times of itself in (If Rate is constant)

 

Trick 4:

In what time will the simple interest be “n” of the principal at “r %” per annum:-

rt =n x 100

 Trick 5:

If a certain sum of money is lent out in n parts in such a manner that equal sum of money is obtained at simple interest on each part where interest rates are R1, R2, ... , Rn respectively and time periods are T1, T2, ... , Tn respectively, then the ratio in which the sum will be divided in n parts can be given by