Powered by PEARL Institute BatalaHelp: 78149 76999
Commercial mathematics

Simple interest: steady growth

Model interest that adds the same amount each year, and solve for principal, rate or time.

IntermediateAbout 12 min3 worked examples
Start learning
01 / THE STARTING POINT

Before you begin

What you need: Percentages and rearranging simple equations.

  • Distinguish interest from total amount
  • Match time units to the stated rate
  • Solve forward and reverse interest problems
02 / BUILD THE CONCEPT

Understand the idea

Interest stays tied to principal

Simple interest is calculated on the original principal only. With ₹1,000 at 10% per year, each full year adds ₹100, regardless of interest already earned.

Amount includes the original money

Interest is the additional amount; total amount A equals P + I. When a question gives the final amount, subtract principal before solving for rate or time.

Rate and time must agree

For a yearly percentage rate, express time in years. Six months is 0.5 years. For days, use the day-count convention stated in the question rather than assuming one.

03 / A DIFFERENT WAY TO SEE IT

The same ₹100 added each year

Start ₹1,000
Year 1 ₹1,100
Year 2 ₹1,200
Year 3 ₹1,300
Simple interest on ₹1,000 at 10% per year grows by equal increments.
04 / FROM IDEA TO ANSWER

A method you can reuse

KEEP THIS HANDY

I = P × r × t / 100; A = P + I

P is principal, r the annual percentage rate, and t the time in years.
  1. Write down principal, annual rate and time in years.
  2. Substitute into I = Prt/100, or rearrange it for the unknown.
  3. Add principal only if the question asks for the total amount.
A useful insight

Under simple interest, doubling time is 100/r years for a positive annual rate r%. Principal cancels out.

05 / WATCH THE METHOD WORK

Worked examples

Read the question first. Try a step yourself, then compare your reasoning.

EXAMPLE 01

Find the interest

Find SI on ₹5,000 at 8% per year for 2 years.

  1. Yearly interest = 5000 × 8/100 = ₹400.
  2. For two years: 400 × 2 = ₹800.
  3. If asked for amount, add ₹5,000.
AnswerInterest ₹800; amount ₹5,800
EXAMPLE 02

A partial year

Find SI on ₹12,000 at 6% per year for 9 months.

  1. 9 months = 9/12 = 0.75 years.
  2. I = 12000 × 6 × 0.75/100.
  3. The interest is ₹540.
Answer₹540
EXAMPLE 03

Find the rate

₹2,000 earns ₹400 SI in 4 years. Find the annual rate.

  1. Rearrange: r = 100I/(Pt).
  2. r = 100 × 400/(2000 × 4).
  3. r = 5.
Answer5% per year
06 / YOUR TURN

Check your understanding

Quick questions, with explanations. These are for self-study and do not affect your account score.

0 of 3 questions checked

QUESTION 1SI on ₹1,000 at 5% for 3 years?

See the explanation

₹150. I = 1000 × 5 × 3/100 = ₹150. ₹1,150 is the total amount.

QUESTION 2Convert 18 months to years.

See the explanation

1.5. 18/12 = 1.5 years.

QUESTION 3At 10% simple interest per year, how long does money take to double?

See the explanation

10 years. Doubling means interest equals principal: P = P × 10 × t/100, so t = 10.

07 / TAKE THE NEXT STEP

Put your understanding to work

Log in to save your lesson progress.

EXPLORE THE NUMBERS

Simple Interest Calculator

Change the inputs and follow the working.

Open calculator →TEST YOUR KNOWLEDGE

Simple Interest Practice Quiz 1

Move on to a timed quiz with detailed results.

View quiz →TEST YOUR KNOWLEDGE

Simple Interest Practice Quiz 2

Move on to a timed quiz with detailed results.

View quiz →TEST YOUR KNOWLEDGE

Simple Interest Practice Quiz 3

Move on to a timed quiz with detailed results.

View quiz →BUILD FLUENCY

Simple interest practice

Try a fresh set of ten questions.

Start practice →
NEXT LESSONCompound Interest
← Back to all lessons