**SIMPLE INTEREST:**

Principal : The money borrowed or lent for a certain period is called Sum or Principal

Interest : The extra money paid for the money borrowed is termed as Interest.

Simple Interest :Interest paid on principle amount for certain period of time is termed as simple interest.

**SI = (PRT)/100**

Where P is Principle, T is Number of years, R is Rate of Interest in %

Rule : Simple Interest for D number of days, If P is Principle amount and R is Rate.

**SI = (PRD)/(100x365)**

Ex. Mohan borrowed some money at the rate of 5 % p. a. for the first two years, at a rate of 8 % p. a for the next three years, and at the rate of 10 % for the period beyond five years.. If he pays total interest of Rs. 12500 at the end of 8 years, how much mony did he borrows ?

Solution : Let P be the sum borrowed

**(P x 5 x 2)/100 +(P x 8 x 3)/100 + (P x 10 x 3)/100 =12500, P= 19531.25**

Ex. A sum of money doubles itself in 8 years at simple interest. What is the rate of interest ?

Solution :Let the Sum is Rs 100, after 8 years it will become 200

So Interest will be = 200 - 100 = 100 , so the rate of interest will be :

**RI = (100 x SI)/(P x T) = (100 x 100)/(100 x 8) =12.5%.**

Ex. A sum of money amounts to Rs. 9800 after 5 yers and Rs. 12005 after 8 years at the same rate of simple interest. What is the rate of interest per annum ?

Solution : Simple interest for 8 years - Simple interest of 5 years = Simple interest for 3 years = 12005 - 9800 = 2205

**Principle = (9800 - 3675) = 6125, RI = (100 x 3675)/(6125 x 5) = 12%**