Word Problems on Simple Interest

Word Problems on Simple Interest are solved here:

1. Robert deposits $ 3000 in State Bank of India for 3 year which earn him an interest of 8%.What is the amount he gets after 1 year, 2 years and 3 years?

Solution:

In every $ 100, Robert gets $ 8.

(Since rate is 8% → 8 for every 100)

Therefore, for $ 1 he gets = $ 8/100

And for $ 2000 he gets = 3000 x 8/100

= $ 240

Simple Interest for 1 year = $ 240.

Simple Interest for 2 year = $ 240 x 2

= $ 480

Simple Interest for 3 year = $ 240 x 3

= $ 720

Therefore, Amount after 1 year = Principal (P) + Simple Interest (SI)

= 3000 + 240

= $ 3240

Amount after 2 years = Principal (P) + Simple Interest (SI)

= 3000 + 480

= $ 3480

Amount after 3 years = Principal (P) + Simple Interest (SI)

= 3000 + 720 = $ 3720

We observe from the above example that, the Interest cannot be calculated without Principal, Rate and Time.

Therefore, we can conclude that Simple Interest (S.I.) depends upon:

(i) Principal (P)

(ii) Rate (R)

(iii) Time (T)

And therefore, the formula for calculating the simple interest is

Simple Interest (SI) = {Principal (P) × Rate (R) × Time (T)}/100

Amount (A) = Principal (P) + Interest (I)

Principal (P) = Amount (A) – Interest (I)

Interest (I) = Amount (A) – Principal (P)

2. Richard deposits $ 5400 and got back an amount of $ 6000 after a year. Find the simple interest he got.

Solution:

Principal (P) = $ 5400,

Amount (A) = $ 6000

Simple Interest (SI) = Amount (A) – Principal (P)

= 6000 - 5400

= 600

Therefore, Richard got an interest of $ 600.

3. Seth invested a certain amount of money and got back an amount of $ 8400. If the bank paid an interest of $ 700, find the amount Sam invested.

Solution:

Amount (A) = $ 8400,

Simple Interest (SI) = $ 700

Principal (P) = Amount (A) – Interest (I)

= 8400 - 700

= 7700

Therefore, Seth invested $ 7700.

4. Diego deposited $ 10000 for 4 year at a rate of 6% p.a. Find the interest and amount Diego got.

Solution:

Principal (P) = $ 10000,

Time (T) = 4 years,

Rate (R) = 6% p.a.

Simple Interest (SI) = {Principal (P) × Rate (R) × Time (T)}/100

= (10000 x 6 x 4)/100

= $ 2400

Amount (A) = Principal (P) + Interest (I)

= 10000 + 2400

= $ 12400

The interest Diego got = $ 2400.

Therefore, the amount Diego got $ 12400.