📘 Simple Interest – Complete Concept for Competitive Exams

Sainik School | RMS | Navodaya | Foundation Level

1️⃣ Definition

Simple Interest (SI) is the interest calculated only on the original principal amount for the entire period.

It does NOT include interest on previously earned interest (unlike Compound Interest).

2️⃣ Basic Formula

SI = (P × R × T) / 100

P = Principal
R = Rate of Interest (per annum)
T = Time (in years)

Amount (A) = P + SI

3️⃣ Important Concepts

Principal (P): Initial amount invested or borrowed
Rate (R): Percentage per year
Time (T): Duration in years

⚠ Always convert time into years.

Months → Divide by 12

Days → Divide by 365

4️⃣ Example Problems

🔹 Example 1

Find SI on ₹10,000 at 8% for 2 years.

SI = (10000 × 8 × 2) / 100 = ₹1600

Amount = ₹11,600

🔹 Example 2

A sum becomes ₹5,400 in 2 years at 10%. Find Principal.

5400 = P + (P × 10 × 2)/100

5400 = 1.2P

P = ₹4500

5️⃣ Shortcut Tricks for Exams 🎯

⭐ Percentage Method

If Rate = 6% for 3 years → Total % = 18%

Principal = 5000

SI = 18% of 5000 = ₹900

⭐ Direct Proportion Rule

If Principal doubles → Interest doubles

If Rate doubles → Interest doubles

If Time doubles → Interest doubles

SI ∝ P, R, T

6️⃣ Simple Interest vs Compound Interest

Feature	Simple Interest	Compound Interest
Calculation	On Principal only	On Principal + Interest
Growth	Linear	Exponential
Formula	PRT/100	P(1+R/100)^T

7️⃣ Real-Life Applications

Short-term loans
Basic car loans
Educational loan calculations
Basic savings interest

8️⃣ Exam-Oriented Important Points

✔ Always check time unit

✔ Use shortcut percentage method

✔ Practice reverse questions (Find P, R, T)

✔ Avoid calculation mistakes in division

9️⃣ Practice Question

Find SI on ₹12,000 at 5% for 3 years.

SI = (12000 × 5 × 3) / 100 = ₹1800

🔥 Final Revision Formula Box