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Introduction
Simple Interest (SI) is the extra money paid or earned on a principal amount over a period of time at a fixed rate. This is the most basic concept in interest problems and forms the foundation for advanced patterns.
Pattern: Basic SI Calculation
The formula is: SI = (P × R × T) / 100
Where:
P = Principal (initial amount)
R = Rate of interest (per annum)
T = Time (in years)
Step-by-Step Example
Question
Find the Simple Interest on ₹5000 at 10% per annum for 2 years.
Options:
A. ₹800
B. ₹900
C. ₹1000
D. ₹1200
Solution
Step 1: Identify the values
P = 5,000, R = 10%, T = 2 years.Step 2: Apply the formula
SI = (P × R × T) / 100.Step 3: Calculate the interest
SI = (5,000 × 10 × 2) / 100 = 1,000.Final Answer:
₹1,000 → Option CQuick Check:
Interest for 1 year = 10% of 5,000 = 500. For 2 years → 500 × 2 = 1,000 ✅
Quick Variations
1. Change the time period (months → convert to years).
2. Interest may be asked in fractional years (e.g., 6 months = 0.5 years).
3. Sometimes directly ask for total amount = Principal + SI.
Trick to Always Use
- Step 1 → Write the formula clearly.
- Step 2 → Plug values directly, avoid mental shortcuts.
- Step 3 → For month-based questions, convert months to years before applying formula.
Summary
- Use SI = (P × R × T) / 100 for all simple interest problems.
- Keep P in rupees, R in percent, and T in years for correct calculation.
- Convert months to years whenever required.
- Verify by checking yearly interest × number of years.
Example to remember:
On ₹5,000 at 10% per annum for 2 years, SI = ₹1,000.