DERIVATION OF THE FORMULA TO CALCULATE SIMPLE INTEREST

 The money borrowed or lent out for a certain period Principle

is called
 How can you represent principle in the form of principle
hundreds? 100
 What is meant by rate of simple interest? Interest is generally expressed as percent of the principle for a
period of one year.
For example: the interest paid for a principle of rs 100 for 1
year.

 10% Rate of interest means? 10/- interest on Rs 100 principle for 1 year.

 What is the simple interest for the principle Rs 200

at the same rate of interest? 20/-

 What is the simple interest for the principle Rs 400

at the same rate of interest? 40/-

 What is the simple interest for the principle Rs 800

at the same rate of interest? 80/-

 What is the simple interest for the principle of ‘P’ at P x 10

the same rate of interest? 100

 Why did you say P/100 instead of ‘P’ ? To represent ‘P’ In terms of percentage.

 What is the simple interest for the principle of ‘P’ at

P X 10 X 2
the same rate of interest at the end of 2 years?
1OO

 What is the simple interest for the principle of ‘P’ at

P X 10 X 3
the same rate of interest at the end of 3 years?
1OO

 What is the simple interest for the principle of ‘P’ at

P X 10 X 5
the same rate of interest at the end of 5 years?
1OO
 What is the simple interest for the principle of ‘P’ at
P X 10 X T
the same rate of interest at the end of ’ T’ years?
1OO

 What is the simple interest for the principle of ‘P’ at PXRXT

the R% rate of interest at the end of ’ T’ years? 1OO

 This can be written as Simple interest (S.I) = P X T XR

1OO