Principal is the sum of money borrowed.
Interest is the additional money to be given.
Amount to be returned = Principal + Interest
Eg. : Find out the simple interest on a sum of 400 units for 1 year at the rate of 5%
per annum.
Principal = 400 units
Rate of interest = 5% per annum
Interest on 100 units for 1 year = 5 units
Interest on 400 units for 1 year =^1005 ×^400
= 20 units
The idea of simple interest may be explained with written examples.
Note : Unitary method
Unitary method is the process in which the value of the required is found by converting
the given quantity into one unit.
Eg. : Let the cost of 5 books be 50 units. To findout the cost of 10 books, first the cost
of 1 book must be found.
Cost of 5 books = 50 units
Therefore, cost of 1 book =^505 =^10 units
Therefore, cost of 10 books = 10 ×^ 10 = 100 units.
- Formula for Simple Interest
Let, ‘p’ be the principal
‘n’ be the number of years
‘r’ be the rate of interest
