Simple interest is the
amount paid by the borrower to lender for the use of his money. The sum repaid
by the borrower I e principal plus interest is called the amount. It is usually
given at a certain rate per period of time eg quarterly, half yearly, yearly
etc.
The interest is proportionate to the
rate and the period. (time)
When the money borrowed is for a
number of months, it is divided by
12. If it is for a number of days, it
is divided by 365, which give us a fraction of one year.
The formula may be expressed as
follows:
I = PxYxR
100
Where I = Interest
P = Principal
Y =
Number of Years or period
R = Rate per cent
Example one
Fin d the simple interest and amount of N10000 for 1 year at 5% per
Annum
When you simplify you have:
Interest. = 5/100
x10000/1 =N500 .
Amount = N10,
000+500=N10.500.
Example Two:
Find the simple interest on N100 for 3 month at 5
percent per annum
When you simplify you have;
Simple interest =
N 5/100x100/1x3/12 = N1.25
Example Three
Find the simple interest on N100, 000 for 146 days at
5 percent per annum.
When you simplify you have:
5/100x100, 000/1x146/365 =N2,000
Example four
Find the simple interest on N480 for 5 months at 43/4 percent
per annum.
When you simplify you have:
= 480x5x43/4
12x100
= 480x5x19
12x400
= N9.50.
Example five
What sum will earn N15 .75 interest 146 days at 41/2 per cent.
When you simplify you have:
Principal = N153/4x100
146
365 x 41/2
= 63x100x2x365
4x146x9
= N875
From the above we; may deduce as follow.
PxYxR
100
= Interest
PxYxR=1x100
(multiply both side 100)
(1)
P=Ix100 (divide both sides by YxR)
YxR
(2)
Y=Ix100 (divide both sides by PxR)
PxR
(3)
R=Ix100
(divide both sides by PxY)
PxY
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