Simple Interest Formula Test Questions and Answers
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Simple interest is normally expressed as a percentage and is normally used to show what either has to be paid to borrow money or lend money. By borrowing / lending the principal amount (the loan amount) you would normally expect to receive something in return or pay something because of this loan. This is normally expressed as a percentage and is called the simple interest rate. There is also something called the Compound Interest Rate Formula but that you can read more about in the link just provided.
The formula for simple interest is the following: Simple Interest = Principal*Interest Rate*Time
This means that to calculate the simple interest amount you just need to know the interest rate and the time scale and the principal amount. Let's look at an example:
Principal: 100
Simple Interest: 5% (will be expressed as 0.05 in calculations)
Time: 1 Year
Simple Interest Amount: 100*0.05*1 = 5
If the Time period was 2 Years then it would just be 100*0.05*2=10
Now let's look at some questions using this newly learnt simple interest formula.
A sum of money amounts to 9800 after 5 years and 12005 after 8 years at the same rate of simple interest. The rate of interest per annum is:
Answer & Explanation:
Answer: Option C
Explanation: S.I. for 3 years = (12005 - 9800) = 2205.
S.I. for 5 years = (2205/3)x 5 = 3675
Principal = (9800 - 3675) = 6125.
Hence, interest rate = (100 x 3675)/(6125x5)% = 12%
What will be the ratio of simple interest earned by certain amount at the same rate of interest for 6 years and that for 9 years?
Answer & Explanation:
Answer: Option C
Explanation:
A certain amount earns simple interest of 1750 after 7 years. Had the interest been 2% more, how much more interest would it have earned?
Answer & Explanation:
Answer: Option D
Explanation: We need to know the S.I (simple interest)., principal and time to find the rate.
Since the principal is not given, so data is inadequate.