Page 121 - New Medley 5 Semester 2

Rate of Interest

For a certain period of time and for a given sum of money, the interest

is calculated at a fixed rate. The fixed rate is called rate of interest or
interest rate. Generally, it is given in percentage for a year. Let us see
an example.

Mr. Sachdeva deposited `5000 in a bank for 3 years at the interest rate
of 10% per annum. What interest will he get after 3 years? What amount

will the bank return to him?

Given, Principal = `5000, Time = 3 years and Rate = 10% p.a.

10
For 1 year, Interest for `100 = 10% of `100 = × `100 = `10
100

10
For 1 year, Interest for `1 = `
100

10
For 1 year, Interest for `5000 = ` × 5000 = `500
100

For 3 years, Interest for `5000 = 3 × `500 = `1500

`5000 × 10 × 3 This
Also, `1500 = formula is used
100 to calculate the

P×R× T interest.
i.e., S.I. =
100

Further, Amount = P + S.I. = `5000 + `1500 = `6500

Thus, the bank will return `6500 including `1500 for interest to

Mr. Sachdeva.

Example 1: Calculate the simple interest and amount for a sum of
`8000 at the rate of 7% per annum for 2 years.

Solution: Given, Principal = `8000, Rate of interest = 7% p.a. and
Time = 2 years

P × R × T
As S.I. =
100

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