Simple Interest: Earnings on Money

Today's big idea

Simple interest is principal times rate times time, divided by 100, with time in years.

Amount means principal plus interest, so read which of the two is wanted.

How it works

👀 What's going on?

Money left in a bank grows, and money borrowed costs extra. The simplest version of that charge is worked out the same way every year, on the amount you started with.

💡 Here's the trick

Look at the bars above. The principal never changes, so each year earns exactly the same interest. That is what makes it simple: three years earn three times what one year earns.

🪄 How to do it

1.Read the principal, rate and time off the bars above.
2.Check the time is in years, converting months if needed.
3.Work out principal times rate times time, divided by 100.

✍️ Try it

Find the interest on 4,000 rupees at 7 percent for 2 years. Then: 2,500 rupees earns 375 rupees in 3 years, so what is the rate?

4,000 times 7 times 2, divided by 100, gives 560 rupees. For the second, 375 equals 2,500 times R times 3 over 100, so R is 5 percent.

⚠️ Watch out

You might be thinking a question asking what you get back wants the interest. It wants the amount, which is the principal plus the interest. Read which of the two is being asked for.

🌟 Why this matters

Savings accounts, loans and instalment plans all quote a rate per year, and this tells you what that rate actually costs.
Exam tip: A time given in months must be divided by 12 before it enters the formula.

Watch me solve one

Quanta solves it

“Watch how I think through one of these — then you try.”

THE PROBLEM

“Find simple interest on ₹1,500 for 3 years at 4% per year.”

1
Recall formula
SI = (P × R × T) ÷ 100. 💰
2
Substitute
(1500 × 4 × 3) ÷ 100
3
Compute
= 18,000 ÷ 100 = 180.
4
Answer ✓
₹180

Now you try one — same steps, different story 👇

See it in action

⚡ Time to play!

Simple Interest = Principal × Rate × Time ÷ 100.

INTEREST · ROUND 1 OF 3

Simple interest on ₹2,000 for 3 years at 4% per year.

Quick check

✅ VERIFICATION

Find the AMOUNT received on 6,000 rupees at 5% per year for 2 years.

⚡ Finish the activity above first to answer.

Keep going!

Up next: Counting Principle

M ways × N ways = M × N total combos. Always multiply, never add.

Concept 7 of 7 →