A Borrows Rs 800 at the Rate of 12% Per Annum Simple Interest
This article will discuss a scenario where a person named A borrows Rs 800 at a simple interest rate of 12% per annum. We will explore how to calculate the interest earned and the total amount payable after a specific time period.
Understanding Simple Interest
Simple interest is a type of interest calculated only on the principal amount of a loan or deposit. It is a fixed percentage of the principal amount that is charged or earned over a specific time period.
Here's the formula to calculate simple interest:
Simple Interest = (Principal × Rate × Time) / 100
Where:
- Principal: The original amount borrowed or invested.
- Rate: The annual interest rate.
- Time: The time period for which the interest is calculated in years.
Applying the Formula to A's Loan
In this scenario, A borrows Rs 800 at an interest rate of 12% per annum. To calculate the simple interest earned, we need to know the time period for which the loan is taken.
Let's assume A borrows the money for 2 years. Applying the formula above:
Simple Interest = (800 × 12 × 2) / 100
Simple Interest = Rs 192
Therefore, the simple interest earned on the loan after 2 years is Rs 192.
Calculating the Total Amount Payable
To find the total amount payable, we add the simple interest earned to the principal amount:
Total Amount Payable = Principal + Simple Interest
Total Amount Payable = 800 + 192
Total Amount Payable = Rs 992
So, A will have to pay a total of Rs 992 after 2 years to clear the loan.
Conclusion
This article demonstrates how to calculate simple interest and the total amount payable on a loan. By understanding the formula and applying it to real-world scenarios, you can easily calculate the interest earned or paid on any loan or investment that uses simple interest.
