Q1
What is the simple interest formula?
AI = (P × R × T) ÷ 100
BI = P + R + T
CI = P × R × T
DI = P ÷ R ÷ T
ICSEClass 7 (ICSE)MathematicsCh 9 · Topic 1
Simple Interest
Simple interest is the extra money earned or paid on a loan or investment, calculated using the formula: Interest = (Principal × Rate × Time
Core concept
Principal is the original amount of money borrowed or invested, while the rate is the percentage charged or earned per year.
How it works
Time is usually measured in years, and the formula I = (P × R × T) ÷ 100 calculates the interest earned or owed.
Why it matters
For example, ₹1000 invested at 5% interest for 2 years earns: I = (1000 × 5 × 2) ÷ 100 = ₹100.
Key detail
Understanding simple interest helps us make informed decisions about savings, loans, and investments in real life.
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Quick notes
• Simple interest formula: I = (P × R × T) ÷ 100.
• P is principal, R is rate, T is time.
• Time is usually in years.
• ₹1000 at 5% for 2 years earns ₹100 interest.
• Simple interest applies to savings.
• It also applies to loans.
• Understanding it helps financial decisions.
• It's a foundational finance concept.