Factors Affecting Interest

We will discuss here what are the different factors affecting interest.

Interest depends on three factors, namely they are

1. Principal

2. Rate of Interest

3. Period of Time

‘P’ is the principal. ‘T’ is the time in years, ‘R’ is the rate of interest per annum and S.I. is simple interest, then we can calculate simple interest by using the following formulae.

S.I. = P × R × T/100

Amount: The sum which is borrowed, repays to the lender along with the interest after using the principal for a certain period is called the Amount.

Therefore, Amount = Principal + Interest

Interest = Amount - Principal

Principal = Amount - Interest

Note: (i) If the time is in months, change it into years by dividing the number of months by 12.

(ii) The present rate has to be changed into a fraction. For example, if the percent rate is 5%, write 5/100 for rate. Do not write 5 for the rate.


Solved examples on calculating interest:

1. Find the interest on $ 2500 at 8 ½ per annum for 4 ½ years?

Principal = $ 2500

Rate = 8 ½ % per annum

= 17/2 % per annum

Time = 4 ½ years = 9/2 years

Interest = P × R × T/100

= $ (2500 × 9/2 × 17/2)/100

= $ (2500 × 9 × 17)/(2 × 2 × 100)

= $ 956.25


2. Find the interest to be paid at the end of one year on $ 500 at 5% per annum.

I = P × R × T/100

= (500 × 5 × 1)/100

= $ 25


3. Find the interest to be paid at the end of one year on $ 900 at 6% per annum

I = P × R × T/100

= (900 × 6 × 1)/100

= $ 54


4. Find the interest to be paid at the end of one year on $ 1200 at 8 ½ % per annum

I = P × R × T/100

= (2000 × 17/2 × 1)/100

= (2000 × 17 × 1)/(2 × 100)

= $ 170

Simple Interest.

Word Problems on Simple Interest.

Factors Affecting Interest

In Simple Interest when the Time is given in Months and Days.

To find Principal when Time Interest and Rate are given.

To find Rate when Principal Interest and Time are given .

To find Time when Principal Interest and Rate are given.

Worksheet on Simple Interest.

Worksheet on Factors affecting Interest





5th Grade Numbers Page

5th Grade Math Problems

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