Simple interest

Simple Interest

The amount of money charged when a person borrows money, e.g., from a bank, is called interest (I). The amount of money borrowed is called principal (P). Interest rate (R) is given as a percentage and is usually taken per year or per annum (p.a). To calculate simple interest, we use the formula:

$I = \frac{P \times R \times T}{100}$

Where:

I: Interest

P: Principal (The money borrowed or invested)

R: Rate of interest (percentage per annum)

T: Time in years

A: Amount (The sum of principal and interest)

Example 1

Find the simple interest on 18,000 sh for 2 years at a rate of 6%.

Solution:

Given:

Principal (P): 18,000 sh

Rate (R): 6%

Time (T): 2 years

Formula: $I = \frac{P \times R \times T}{100}$

$I = \frac{18,000 \times 6 \times 2}{100} = \frac{216,000}{100} = 2,160 \text{ sh}$

Therefore, the simple interest is 2,160 sh.

Example 2

Calculate the simple interest on 25,000 sh for 3 years at a rate of 8%.

Solution:

Given:

Principal (P): 25,000 sh

Rate (R): 8%

Time (T): 3 years

Formula: $I = \frac{P \times R \times T}{100}$

$I = \frac{25,000 \times 8 \times 3}{100} = \frac{600,000}{100} = 6,000 \text{ sh}$

Therefore, the simple interest is 6,000 sh.

Example 3

A person borrows 50,000 sh for 4 years at a rate of 5%. Find the simple interest.

Solution:

Given:

Principal (P): 50,000 sh

Rate (R): 5%

Time (T): 4 years

Formula: $I = \frac{P \times R \times T}{100}$

$I = \frac{50,000 \times 5 \times 4}{100} = \frac{1,000,000}{100} = 10,000 \text{ sh}$

Therefore, the simple interest is 10,000 sh.

Example 4

Find the simple interest on 12,000 sh for 6 years at a rate of 10%.

Solution:

Given:

Principal (P): 12,000 sh

Rate (R): 10%

Time (T): 6 years

Formula: $I = \frac{P \times R \times T}{100}$

Calculation:

$I = \frac{12,000 \times 10 \times 6}{100} = \frac{720,000}{100} = 7,200 \text{ sh}$

Therefore, the simple interest is 7,200 sh.

Example 5

If a person deposits 15,000 sh in a bank for 2 years at an interest rate of 12%, calculate the interest.

Solution:

Given:

Principal (P): 15,000 sh

Rate (R): 12%

Time (T): 2 years

Formula: $I = \frac{P \times R \times T}{100}$

$I = \frac{15,000 \times 12 \times 2}{100} = \frac{360,000}{100} = 3,600 \text{ sh}$

Therefore, the simple interest is 3,600 sh.

Example 6

Calculate the simple interest on 40,000 sh for 5 years at a rate of 7%.

Solution:

Given:

Principal (P): 40,000 sh

Rate (R): 7%

Time (T): 5 years

Formula: $I = \frac{P \times R \times T}{100}$

$I = \frac{40,000 \times 7 \times 5}{100} = \frac{1,400,000}{100} = 14,000 \text{ sh}$

Therefore, the simple interest is 14,000 sh.