MATH SIMPLE INTEREST AND COMPOUND INTEREST

                                          SIMPLE INTEREST AND COMPOUND INTEREST

  

In this word every one doing business ,business means profit . that profit is somehow known as interest in this chapter.

                          Let us understand the interest concept .  If you deposit some money into bank then bank will provide some some extra money (interest)  for yours submitted money into bank at end of year or half yearly etc. Similarly bank will take some extra money (interest) if you borrow money from bank at end of year or half yearly etc.

                                                             There are two type of interest .

1.       SIMPLE INTEREST(SI) :  interest only on Principal money/principal amount  at each year or half                                                            

                                          yearly  etc.

                                        Suppose Principal Money (money you have) Is P

                                                         Time ( duration for money lend/borrow) is T.

                                                          Rate of interest  is R %.

                                                                 simple interest (SI)=(P*R*T)/100

       

   And              SUM OF MONEY=PRINCIPAL AMOUNT + SIMPLE INTEREST    

    2.COMPOUND INTEREST(CI): interest  on (Principal money + interest ) at previous year. 

                                                         Suppose Principal Money is P.  AND rate of interest is R%.

                                                         For First year Simple Interest and Compound interest will be                                                              same. Now     

                                                        Suppose for first year Interest is I then for next year interest wil be                                                         on   (Principal Money + I) . now IF  for second suppose interest is                                                         I1 .Then for third money interest will on ((Principal Money + I+                                                              i1).

                                                                          Similarly……

                                    

                            Let us suppose SUM OR AMOUNT (P + interest) IS A  , AND  Principal Money is                             P

             Time ( duration for money lend/borrow) is T.

             Rate of interest  is R %.

Then

                  AMOUNT=P*(1 + R/100)^T

               CI= P*[(1 + R/100)^T -1]

NOTE  : IF QUESTION IS ASKED FOR DIFFERENCE BETWEEN SI AND CI  

1)       For 2 year

       CI-SI=P*(R/100)²

2)      For 2 year

       CI-SI=P*{(R/100)²} *{(300+R)/100}

                                          END OF THERORY
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                                         QUESTION

QUESTION 1: SIMPLE INTEREST IS 30% OF PRINCIPAL IN 5 YEARS.FIND RATE OF INTEREST.

Solution:     Here at strike a question in mind where is principal amount , but really we can solve     

                      Question without knowing the principal amount.

                    Use formula

                          SI=P*R*T/100

                          30/100 of P=P*R*T/100

                           3/10 *P=P*R*5/100

           R=6%