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Simple Interest Concepts and Formulas

Points to remember:

1. Interest: It is the money paid by the borrower to the lender for using the borrowed money.

2. Principal: The total amount of money borrowed by the borrower is called principal.

3. Amount: It is the sum of the interest and principal i.e. the total money paid back to the lender which includes principal and interest.

4. Simple Interest: It is the interest which is payable only on the principal e.g. Simple interest on Rs. 100 at the rate of 5% per annum will be Rs. 5 each year; after one year the amount will be 105, and after two year the amount will be Rs. 110 and so on.

Simple Interest is given by:

Apti Simple interest1

Where, I = simple interest
            P = principal
            R = rate of interest
            T = number of years

5. Therefore, Principal =Apti Simple interest1

6. Similarly, Rate of Interest =Apti Simple interest1

7. And, Number of years or time =Apti Simple interest1

8. Amount = Principal + Simple Interest

Simple Interest

Some Quicker Methods:

1.) The payment that can clear a debt of Rs. A for t years at the rate of interest r% per annum is given by:

Simple Interest1

2) If a sum of money becomes X times in t years at simple rate of interest then the rate of interest is given by:

Simple Interest1

When different amounts of money mature to the same amount at simple rate of interest, then the ratio of the amounts invested is given by:

Simple Interest1

3) There are two equal amounts of money for t1 and t2 years at r1% and r2% respectively. If the difference between their interests is Id then the sum is given by:

Simple Interest1

Similarly, if the difference between interests on certain sum for t1 years at the rate of interest r1 and for t2 years at the rate of interest r2% is X then, the sum is given by:

Simple Interest1

4) If a sum amounts to Rs. P1 in T1 years and Rs. P2 in T2 years at simple rate of interest, then the rate of interest is given by:

Simple Interest1
Aptitude SI Test Paper 1
Aptitude SI Test Paper 2





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