Question

Simple interest is given by $I = \dfrac{{PTR}}{{100}}$ If $p = Rs.900,{\text{ T = 2}}$ years and $R = 5\% $. Find the simple interest.

Answer 1

Hint: Interest is defined as the amount paid for using someone else’s money. Here we will use the formula for simple interest and place the given data and simplify for the resultant required value.

Complete step by step solution:
Given data:
Principal, $p = Rs.900$
Term period$,{\text{ T = 2}}$
Rate of interest, $R = 5\% $
Simple interest can be given by the formula,
$I = \dfrac{{PTR}}{{100}}$
Place the given values in the above expression –
$I = \dfrac{{900 \times 2 \times 5}}{{100}}$
Find the factors for the terms in the numerator of the above expression –
$I = \dfrac{{9 \times 100 \times 2 \times 5}}{{100}}$
Common factors from the numerator and the denominator cancel each other and therefore remove from the numerator and the denominator.
$I = 9 \times 2 \times 5$
Simplify the above expression finding the product of the terms on the right hand side of the above expression.
$I = 90$Rs.
Hence, the interest for the said principal, term period and the rate of interest is Rs. $90$.

Note:
> Remember the difference between simple interest and compound interest and apply its concept accordingly wisely. Compound interest is defined as the interest paid for the interest earned in the previous year. Be good in multiples and division and do simplification carefully.
> In other simple words, present value is expressed as that the amount received in the future is not as worth as an equal amount received today. Always remember the relation and difference among the present value and the principal amount. Compound interest is the interest which is calculated for the interest earned in the previous year along with the principal amount.