SIMPLE INTEREST | Webbpedia

Interest is the money paid for saving a particular amount of money.

Simple interest can be calculated using the formula

Simple interest I = PRT/100

Where P= principal, R=rate & T= time

Also total amount =principal +interest

Example 1

Find the simple interest on N60, 000 for 5 years at 9% per annum

Solution

Applying I=PRT/100 P= N 60,000 R=9% T=5 years

I = 60,000 x 9 x 5/100

= N 27,000

Example 2

A man borrows N 1,600,000 to buy a house .He is charged interest at the rate of 11% per annum. In the first year, he paid the interest on the loan. He also paid back N 100,000 of the money borrowed. How much did he pay back altogether? If he paid this money by monthly instalment, how much did he pay per month?

Solution

P= N 1,600,000 R=11% T=1 year

Interest on N 1,600,000 I =PRT/100 =1600,000 x11x1/100 = N 176,000

The total amount paid in the first year= N 100,000 + N 176,000 = N 276,000

Monthly payment =276.000/12 = N 23,000

Class work

Find the simple interest on the following:
N 10,000 for 31/2 years at 4% per annum
N 20,000 for 4 years at 4% per annum
A man got N 1,800,000 loan to buy a house .He paid interest at a rate of 9% per annum. In the first year, he paid the interest on the loan. He also paid back N 140,000 of the money he borrowed. (a) How much did he pay in the first year altogether.

Profit and loss percent

Profit means gain, while loss is the inverse of profit.

% Profit is the percentage of the gain made from a particular product or item

% Profit = profit/cost price x 100

To find the selling price of an article

At loss = cost price loss

At gain= cost price + profit

Example

A trader buys a kettle for N 800 and sells at a profit of 15%. Find the actual profit and the selling price

Solution

Profit =15 of N 800

=15 x800

= N 120

Selling price = C. + profit

= 800+120

= N 920

A hat is bought for N 250 and sold for N 220, what is the loss percent

Solution

Cost price C.P = N 250

Selling price = N 220

Lost= N 250- N 220 = N 30

% Loss =loss/C.P x 100%

=30/250 x100%

=300/25 =12%

Class work

Find the actual profit and the selling price of a material which cost #1000 sold at a profit of 15%
A farmer buys a land for #40,000 and sells it for N 33,000 what is the percentage loss?
A car that cost N 336,000 was sold at a loss of 17½%. What is the selling price

Discount and Commission

A discount is a reduction in price of goods or items. Discount are often given for paying in cash

Commission: this is the payment for selling an item.

Examples

Find the discount price, if a discount of 25% is given on a market price of #9,200

Solution

Discount =25% of N 9,200

=25/100 x9, 200=2,300

A radio cost N 5,400 .A 12½% discount is given for cash. What is the cash price

Solution

Discount =12 ½% of N 5,400

= 25/2×100 x 5400

=25/2×100 x 5400=675

Cash price = N 5,400-675 = N 4725

A bank charges 2½ % commission for issuing a bank draft to its customers, if a customer obtained a bank draft for N 84,000 from the bank, calculates the total cost of the bank draft.

Solution

Commission =22% of N 84,000

5/2/100 x 84,000

=5/2×100 x 84, 000

= N 2,100

Total cost of bank draft =84,000+ N 2,000 = N 86,100

Class work

Find the discount price if a discount of 20% is given on a market of N 2,915
The selling price of a table is N 14,000, the trader gives a 25% discount for cash, what is the cash price
An insurance agent sells N 284,000 worth of insurance, his commission is 20% .How much money does he get

WEEKEND ASSIGNMENT

Calculate the simple interest on N 200 in 2 years at 4% per annum (a) N 160n (b) N 240 (c) N 16 (d) N 260
Calculate the simple interest on N 20,000 for 2^1/2years at 2% per annum (a) N 10 (b) N10, 000 (c) N 1000 (d) N 2000
Find the simple interest on N 40,000 for 1 year at 5% per annum (a) N 100 (b) N 250 (c) N 2,590 (d) N 50
What is the simple interest on #70,000 for 1 year at 4% per annum (a) N 2,800 (b) N 2,000 (c) N 2,400 (d) N 2,300
Find the simple interest on N 10,000 for 3 years at 6% per annum (a) N 1,800 (b) N 1000 (c) N 1,850 (d) N 1,200