Question

Principal amount is given as 2500 Rs, the rate of interest per annum is equal to 6 percent and the time for which the money is kept is 4years. Calculate the interest.

Answer 1

Hint: Now we have the values of principal, rate of interest, and time. Now we know the formula of simple interest is $\dfrac{P\times r\times t}{100}$ where P is principal amount r is the rate of interest per annum and t is time in years.

Complete step-by-step solution:
Now let us first understand interest. When we take a loan the amount of the loan is nothing but the principal amount. Now interest percent is nothing but the percentage of extra money you have to give per annum. And time if for how many years the interest is taken for.
For example, if you take a loan of 100Rs at 10 percent a year for 1 year you have principal amount = 100Rs. Rate of interest as 10 percent and time as 1 year.
Now the total interest is the extra money that you pay and is calculated by
$I=\dfrac{P\times r\times t}{100}$ where P is the principal amount, r is the rate of interest and t is time in years.
Now we have P = 2500, r = 6 percent and t = 4 years hence we get
$I=\dfrac{2500\times 6\times 4}{100}$
Hence I = 25 × 6 × 4 = 600.
Hence the interest after 4 years is 600 Rs

Note: Note that in the formula we have divided by 100 because the value of r that is the rate of interest is in percentage. We have x percent as $\dfrac{x}{100}$ . Hence the formula is nothing but $P\times \dfrac{r}{100}\times t$ .
Also, note that Interest and total amount paid is different. The total amount paid is given by P + I. Where P is the principal amount and ‘I’ is the interest.