Example 1: A sum of money at simple interest amounts to Rs. 850 in 3 years and to Rs. 900 in 4years. The sum is:

(a) Rs. 650
(b) Rs. 690
(c) Rs. 725
(d) Rs. 700

S.I. for 1 year = 900 – 850 = Rs 50

S.I. for 3 years = 50 x 3 = Rs 150

Original Amount/ Principal = 850 – 150 = Rs 700

Example 2: Maninder invested into two different schemes, P and Q at simple interest rate,an amount of Rs. 15,000. Rate of interest for scheme P & Q were 14% p.a. and 18% p.a. respectively. If the total amount of simple interest earned in 2 years be Rs. 5000, what was the amount invested in Scheme P?

(a) Rs. 5000
(b) Rs. 6500
(c) Rs. 7200
(d) Rs. 7500

Let the sum invested in Scheme P be Rs. x and that in Scheme Q be Rs. (15000 – x).

Then, {x x 14 x 2}/100 + {(15000 – x) x 18 x 2}/100 = 5000

28x+540000-36x=500000

8x=40000

x=5000

Hence, money deposited in scheme P = Rs 5000.

Question 3: A sum of Rs. 15,000 amounts to Rs. 19,500 in 5 years at the rate of simple interest. Whatis the rate of interest?

(a) 3%
(b) 4%
(c) 5%
(d) 6%

Here P = Rs. 15000 and Amount = Rs. 19500

Hence S.I. = Rs. 19500–Rs. 15000 = Rs. 4500.

We know: Simple Interest (SI) = (P x R x T)/100

P – Principal amount, T- Number of years, R – Rate of Interest

Therefore, 4500 = (15000xRx5)/100

R = 6%

Question 4: How much time will it take for an amount of Rs. 900to yield Rs. 81 as interest at 2.25%per annum of simple interest?
(a) 3 years
(b) 4 years
(c) 5 years
(d) 6 years

We know: Simple Interest (SI) = (P x R x T)/100

P – Principal amount, T- Number of years, R – Rate of Interest

Therefore: 81 = (900×2.25xT)/100

T = 4 years

Question 5: A money-lender claims he lends money at simple rate of interest of 10% per annum. But he cleverly tricks the farmers by including the interest amount in the principal when he calculates it every six months. The effective annual rate of interest he is charging is:

(a) 10%
(b) 10.25%
(c) 10.5%
(d) 10.75%

Let the sum be Rs 100.

Then,

S.I. for first six months = Rs. (100 x 10 x 1)/(100×2)= Rs. 5

Increased principal for the last six months= Rs. 105

SI for the last six months = Rs. (105 x 10 x 1)/ (100×2)

SI = Rs. 5.25

Net interest charged in an year = Rs. 10.25

Hence, effective rate of interest = (10.25/100) x 100 = 10.25%.