In simple interest we will learn and identify about the terms like Principal, Time, Rate, Amount, etc.

Suppose Ron has deposited $100 in a bank. Ron goes to the bank to
find out about his deposited money. The manager of the bank informs Ron
that $100 deposited in the bank one year before has now become $110. Ron
enquires how did $100 become $110 after one year?

The manager told that when someone deposits money in a bank, we pay some extra money on the deposited amount.

For example, suppose the bank has given a loan of $6000 to Jack to purchase a tractor. After three years Jack returns back the loan along with 10% interest charged by the bank.

Here, the money borrowed (loan is the principal and the extra money to be paid is called the interest.

The interest is only a fair payment for using another person’s money.

**PRINCIPAL (P):**

The money you deposit or put in the bank is called the PRINCIPAL.**INTEREST (I):**

The extra money you get from the bank after depositing is called the INTEREST.**AMOUNT (A):**

The total money means the PRINCIPAL and INTEREST you get after a fix time is called the AMOUNT.

**Notes:**

**P** is the money deposited or borrowed called the PRINCIPAL.

**T** is the TIME or number of years for which the money is deposited or borrowed.

The interest is calculated at a RATE per cent decided by the bank every year. This is **R** % p.a. (per annum or per year)

**PRINCIPAL (P) + INTEREST (I) = AMOUNT (A)**

OR

**P + I = A**

There are two types of interests.

**1.** Simple Interest (S.I.).

**2.** Compound Interest (C.I.).

The Simple Interest (SI) remains the same every year.

**Word Problems on Simple 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 Factors affecting Interest**

**5th Grade Numbers Page**

**5th Grade Math Problems**

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