Question

How much would Rs. 36,525 amount to if it was invested at $7{\displaystyle \frac{2}{3}}\mathrm{\%}$ p.a. from 15 October 2007 to 9 march 2008.

Answer 1

Hint: Simple interest is a quick and easy method of calculating the interest charge on a loan. Simple interest is determined by multiplying the daily interest rate by the principal by the number of days that elapse between payments. There are basically two kinds of simple interest: ordinary and exact. These two terms use the same formula for solving the simple interest but they differ on using the time. Ordinary simple interest is a simple interest that uses 360 days as the equivalent number of days in a year.

Complete step-by-step answer:
1. Simple interest is calculated by multiplying the daily interest rate by the principal, by the number of days that elapse between payments.
2. Simple interest benefits consumers who pay their loans on time or early each month.
3. Auto loans and short-term personal loans are usually simple interest loans.
There are two methods used to calculate interest on a fixed deposit: Simple Interest and Compound Interest. Banks may use both depending on the tenure and the amount of the deposit. With simple interest, interest is earned only on the principal amount.
$\mathrm{P}=\mathrm{Rs}.36,525$
$\mathrm{R}=7{\displaystyle \frac{2}{3}}\mathrm{\%}={\displaystyle \frac{23}{3}}\mathrm{\%}$
Time: 15 oct 2007 to 9 March $2008=4$ months 23 days $=4$ months $+{\displaystyle \frac{23}{30}}$ months $={\displaystyle \frac{120+23}{30}}$ months
$={\displaystyle \frac{143}{30}}$ months
$={\displaystyle \frac{143}{30}}\times {\displaystyle \frac{1}{12}}$ years $={\displaystyle \frac{143}{360}}$ years
$\therefore$ Simple Interest $={\displaystyle \frac{\mathrm{P}\times \mathrm{R}\times \mathrm{T}}{100}}={\displaystyle \frac{36,525\times {\displaystyle \frac{23}{3}}\times {\displaystyle \frac{143}{360}}}{100}}$
= Rs. 1082.601
Amount $=\mathrm{SI}+\mathrm{P}$
$=1082.60+36,525$
= Rs. 37607.60.

Note: Loans that might feature simple interest include auto loans, instalment loans, student loans, and mortgages. A savings account is a type of bank account that pays interest. Most savings accounts use compound interest, which is better for the account holder because it pays more than simple interest. Use this simple interest calculator to find $\mathrm{A}$, the Final Investment Value, using the simple interest formula: $A=P(1+rt)$ where $P$ is the Principal amount of money to be invested at an Interest Rate R% per period for t Number of Time Periods. Where $r$ is in decimal form; $\mathrm{r}=\mathrm{R}/100;\mathrm{r}$ and $\mathrm{t}$ are in the same units of time.
We can rearrange the interest formula, I = PRT to calculate the principal amount. The new, rearranged formula would be $\mathrm{P}=\mathrm{I}/(\mathrm{RT}),$ which is the principal amount equals interest divided by interest rate times the amount of time.