Calculate the simple interest to be paid on ₹15000 at 5% per annum after 2 years.
Understand the Problem
The question is asking to calculate the simple interest on a loan of ₹15,000 at a rate of 5% per annum for a duration of 2 years. The user needs to find both the interest amount and the total amount to be paid back after 2 years.
Answer
The Simple Interest is ₹1500 and the total amount to be paid back is ₹16500.
Answer for screen readers
The Simple Interest is ₹1500 and the total amount to be paid back after 2 years is ₹16500.
Steps to Solve
- Identify the formula for Simple Interest
The formula to calculate Simple Interest (SI) is given by:
$$ SI = \frac{P \times R \times T}{100} $$
where:
- $P$ = Principal amount (the initial amount)
- $R$ = Rate of interest per annum
- $T$ = Time in years
- Substitute the known values into the formula
Given:
- $P = ₹15,000$
- $R = 5%$
- $T = 2$ years
Now substitute these values into the formula:
$$ SI = \frac{15000 \times 5 \times 2}{100} $$
- Calculate the Simple Interest
Perform the calculation:
$$ SI = \frac{15000 \times 5 \times 2}{100} = \frac{150000}{100} = ₹1500 $$
- Calculate the Total Amount to be paid back
The total amount (A) to be paid back is the sum of the principal and the interest:
$$ A = P + SI $$
Substituting the values:
$$ A = 15000 + 1500 = ₹16500 $$
The Simple Interest is ₹1500 and the total amount to be paid back after 2 years is ₹16500.
More Information
Simple interest is a straightforward way to calculate the interest charge on a loan or the return on an investment, based only on the principal amount, the rate, and the time involved. For the given example, with a principal of ₹15,000 at 5% interest for 2 years, the math shows a clear calculation path to arrive at the total due.
Tips
- Forgetting to convert the percentage into a decimal: Always ensure that the rate is used in percentage form if the formula requires it.
- Not accounting for the time correctly: Ensure that the time period is measured in years, as required by the formula.
- Mixing up the total amount and interest calculation: It's important to clearly separate the calculations for interest and total amount due.
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