Simple Interest: Concepts and Formulas

Key terms

• Principal (P): money borrowed or invested.
• Rate (R): interest per ₹100 per year (% p.a.).
• Time (T): in years.
• Amount (A) = P + SI.

Formula

SI = (P × R × T)/100

Example: ₹5,000 at 8% for 3 years → 5000 × 8 × 3/100 = ₹1,200.

Rearranged forms

• P = (100 × SI)/(R × T)
• R = (100 × SI)/(P × T)
• T = (100 × SI)/(P × R)

Doubling and tripling

Under SI, a sum becomes n times when interest = (n − 1)P.

• Doubles in T years → R = 100/T. Doubles in 10 years → 10%.
• Triples in 20 years → interest 2P in 20 years → 10%.

Exam tips (RRB NTPC)

1. SI is the same every year — it grows in a straight line.
2. If the amount is given, first write A = P(1 + RT/100) and solve for P.

Analogy

Simple interest is like rent on a house. You pay the same rent every month, calculated only on the original house — the rent you already paid never earns extra rent. Likewise, SI is charged only on the original principal, so it adds the same amount every year.