Simple Interest (SI) – Definition, Formulas, Aptitude Questions and Solved Examples with Explanation (Video Lessons)

Simple Interest – Basic Concepts, Examples, Methods, Shortcuts, Math Tricks (Quantitative Aptitude made Simpler)

Definition, Formulas and Quick Tricks for Simple Interest

  1. Def. of Simple Interest: Simple interest is a method to calculate the amount of interest charged on a sum at a given rate and for a given period of time.
  2. Formula for Simple Interest: Simple Interest (SI) = (P * R * T) / 100, where P is the interest, R is the rate and T is the time period.
  3. Principal (P) = 100 * SI / (R * T)
  4. Rate (R) = 100 * SI / (P * T)
  5. Time (T) = 100 * SI / (R * P)
  6. Amount (A) = P + SI => P + (P * R * T) / 100
  7. If a certain sum of money becomes n times itself at R% p.a. simple interest in T years, then T = [(n-1)/R] * 100 years
  8. If a certain sum of money becomes n times itself in T years at a simple interest, then the time T’ in which it will become m times itself is given by T' = (m-1 / n-1) * T years
  9. If a certain sum of money P lent out at SI amounts to A1 in T1 years and to A2 in T2 years, then
    P = (A1T2-A2T1) / (T2-T1),
    R = (A1-A2) / (A1T2-A2T1) * 100%
  10. If a certain sum of money P lent out for a certain time T amounts to A1 at R1 % per annum and to A2 at R2 % per annum, then
    P = (A2R1-A1R2) / (R1-R2),
    T = (A1-A2) / (A2R1-A1R2) * 100 years
  11. In general, interest is considered to be Simple unless otherwise stated.

Questions and Solved Examples on Simple Interest

Q.1: How much Simple Interest can a person get on Rs. 8,200 at 17.5% p.a. for a period of 2 years and 6 months?
A. Rs. 2,850
B. Rs. 3,587.50
C. Rs. 3,750
D. Rs. 3,770.50
Answer: B. Rs. 3,587.50
Explanation: Watch the Simple Interest Video for full explanation

Q.2: In what time will Rs. 4,000 lent at 3% per annum on simple interest earn as much interest as Rs. 5,000 will earn in 5 years at 4% per annum on simple interest?
A. 7 1/2 years
B. 7 1/3 years
C. 8 1/3 years
D. 9 years
Answer: C. 8 1/3 years
Explanation: Watch the Simple Interest Video for full explanation

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Q.3: The S.I. on a certain sum of money for 3 years at 8% per annum is half the C.I. on Rs. 4000 for 2 years at 10% per annum. The sum placed on S.I. is?
A. Rs. 1,550
B. Rs. 1,650
C. Rs. 1,750
D. Rs. 1,850
Answer: C. Rs. 1,750
Explanation: C.I. = [4000 * (1 + 10/100)2 – 4000]
= (4000 * 11/10 * 11/10 – 4000) = Rs. 840
Sum = (420 * 100)/(3 * 8) = Rs. 1750

Q.4: Rs.2500 is divided into two parts such that if one part be put out at 5% simple interest and the other at 6%, the yearly annual income may be Rs.140. How much was lent at 5%?
A. Rs. 1,000
B. Rs. 1,200
C. Rs. 1,300
D. Rs. 1,500
Answer: A. Rs. 1,000
Explanation: (x * 5 * 1) / 100 + [(2500 – x) * 6 * 1] / 100 = 140
X = 1000

Q.5: A sum of money triples itself in 12 years at simple interest. Find the rate of interest?
A. 12 1/2%
B. 14 4/7%
C. 15 2/3%
D. 16 2/3%
Answer: D. 16 2/3%
Explanation: Watch the Simple Interest Video for full explanation

Q.6: The price of a T.V. set is worth Rs. 20,000 that needs to be paid in 20 installments of Rs. 1,000 each. If the rate of interest be 6% per annum and the 1st installment be paid at the time of purchase, then the value of the last installment covering the interest will be?
A. Rs. 17,000
B. Rs. 18,000
C. Rs. 19,000
D. Rs. 20,000
Answer: C. Rs. 19,000
Explanation: Watch the Simple Interest Video for full explanation



Q.7: A sum of money at simple interest amounts to Rs. 815 in 3 years and to Rs. 854 in 4 years. The sum is:
A. Rs. 590
B. Rs. 668
C. Rs. 698
D. Rs. 700
Answer: C. Rs. 698
Explanation: S.I. for 1 year = Rs. (854 – 815) = Rs. 39
S.I. for 3 years = Rs.(39 * 3) = Rs. 117
Therefore, Principal = Rs. (815 – 117) = Rs. 698

Q.8: A sum fetched a total simple interest of Rs. 4016.25 at the rate of 9 p.c.p.a. in 5 years. What is the sum?
A. Rs. 8,725
B. Rs. 8,825
C. Rs. 8,875
D. Rs. 8,925
Answer: D. Rs. 8,925
Explanation: Principal = Rs. (100 * 4016.25) / 9 * 5
= Rs. (401625 / 45)
= Rs. 8,925

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Q.9: Abha took a loan of Rs. 1200 with simple interest for as many years as the rate of interest. If she paid Rs. 432 as interest at the end of the loan period, what was the rate of interest?
A. 3%
B. 6%
C. 9%
D. 12%
Answer: B. 6%
Explanation: Watch the Simple Interest Video for full explanation

Q.10: How much time will it take for an amount of Rs. 450 to yield Rs. 81 as interest at 4.5% per annum of simple interest?
A. 3.6 years
B. 4 years
C. 4.6 years
D. 5 years
Answer: B. 4 years
Explanation: Watch the Simple Interest Video for full explanation