Question

What is Simple Interest?

Answer 1

Simple Interest : The extra money given by the borrower for the privilege of having used the money is called Simple Interest.

Note : i. Interest is usually calculated at the rate of so many rupees for every Rs. 100 of the money lent for a year. This is also called the rate per cent per annum.

Per annum : Per annum (p.a.) means for a year. The words per annum are sometimes omitted. Thus Rs. 8 per annum means that Rs. 8 is the interest or Rs. 100 for one year.

ii. The interest is usually paid yearly, half-yearly or quarterly as agreec upon.