📘 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
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
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
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
✔ 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
SI = (P × R × T) / 100
A = P + SI
