Question

Find the simple interest and the amount when the following are given.
Principal = Rs. 640, Rate = $12\dfrac{1}{2}%$ Time = 5 years.

Answer 1

Hint: Here, we can first find the simple interest using the formula $SI=\dfrac{\left( P\times R\times T \right)}{100}$. Then, we can find the total amount by adding the obtained interest to the principal amount.

Complete step-by-step answer:
Simple interest is a quick and easy method of calculating the interest charge on a loan. Simple interest is determined by multiplying the daily interest rate by the principal by the number of days that elapse between payments. Mathematically it is given by the formula:
$SI=\dfrac{P\times R\times T}{100}.......\left( 1 \right)$
Here, P = principal, R = interest rate and T= time.
When one makes a payment on a simple interest loan, the payment first goes towards that month’s interest and the remainder goes towards the principal. Each month’s interest is paid in full so it never occurs.
Simple interest is calculated on the principal portion of a loan or the original contribution to a savings account. Simple interest does not compound, meaning that an account holder will only gain interest on the principal, and a borrower will never have to pay interest on interest already occurred.
Here, the principal is Rs. 640.
Rate of interest is = $12\dfrac{1}{2}%$
Time = 5 years.
On putting these values in equation (1), we get:
$\begin{align}
  & SI=\dfrac{Rs.640\times 12\dfrac{1}{2}\times 5}{100} \\
 & \Rightarrow SI=Rs.640\times \dfrac{25}{2}\times \dfrac{5}{100} \\
 & \Rightarrow SI=Rs.400 \\
\end{align}$
So, simple interest is = Rs.400.
And, total amount= Rs.640 + simple interest = Rs.640+ Rs.400 = Rs.1040
Hence, simple interest is = Rs. 400 and total amount is = Rs. 1040.

Note: Students should note here that the total amount at the end is given as the interest added to the principal amount. The formula for calculating simple interest must be remembered by the students.