Simple Interest: Formula, Calculation & Applications: 23 flashcards
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1. What is simple interest calculated on?
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Only on the original principal, never on accumulated interest.
2. Write the simple interest formula.
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$$SI = \frac{P \times R \times T}{100}$$
3. What does $P$ stand for in the simple interest formula?
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The principal — the starting sum borrowed or invested.
4. What does $R$ stand for, and in what unit?
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The rate of interest per annum, expressed as a percent.
5. What does $T$ stand for, and in what unit must it be?
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Time — and it must be expressed in years.
6. How is the amount $A$ related to principal and interest?
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$A = P + SI$ — principal plus simple interest.
7. Why is the rate divided by 100 in the formula?
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Because $R$ is a percentage: $R\% = \frac{R}{100}$, which converts it to a decimal multiplier.
8. Convert 6 months into years for the formula.
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$T = \frac{6}{12} = 0.5$ years.
9. Convert 9 months into years for the formula.
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$T = \frac{9}{12} = 0.75$ years.
10. How do you handle time given in days?
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Divide the number of days by 365 (or 366 in a leap year, if specified).
11. Rearrange the formula to find the principal $P$.
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$$P = \frac{100 \times SI}{R \times T}$$
12. Rearrange the formula to find the rate $R$.
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$$R = \frac{100 \times SI}{P \times T}$$
13. Rearrange the formula to find the time $T$.
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$$T = \frac{100 \times SI}{P \times R}$$
14. How does simple interest grow year after year?
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By the same fixed rupee amount each year — it grows linearly.
15. Why does compound interest grow faster than simple interest?
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Because compound interest earns interest on the interest already added, so each year's addition grows.
16. If you double the time $T$ (same $P$ and $R$), what happens to $SI$?
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The simple interest doubles.
17. If you double the principal $P$ (same $R$ and $T$), what happens to $SI$?
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The simple interest doubles.
18. What is the one-year shortcut for simple interest?
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$SI = P \times \frac{R}{100}$ for one year; multiply by $T$ for multiple years.
19. In a simple interest problem, how many quantities are involved and how many are unknown?
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Four quantities — $P$, $R$, $T$, $SI$ — with three known and one unknown.
20. Name two real-life uses of simple interest.
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Short-term loans and moneylender/personal loans (also simple savings schemes and overdue bills).
21. What does 'amount' mean in a simple interest problem?
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Principal plus interest, $A = P + SI$ — not just the interest.
22. What is the most common error in simple interest problems?
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A unit mismatch — plugging months into $T$ instead of converting to years.
23. What does 'per annum' mean?
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Per year — the rate is quoted for a one-year period.
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