Simple Interest

Interest calculated only on the

original investment each year
is called Simple Interest.
I= Pnr
I=Simple Interest
P=Principal Amount
n= number of years
r= rate of interest
 How is it possible?

STORY
P=1000
SIMPLE INTEREST
N=10
R=10 P=1000
A=Rs.204845 N=10
R=10
A=Rs.1100
 1ST YEAR 2ND YEAR
TOTAL DIFFEREN
GROUP
AMOUNT CE
P I P I

A 1000
Simple
Interest
B 1000

C 1000
Compound
Interest
D 1000
 Compound Interest
Interest for each year is added to the current
amount in calculating interest for the next year,
without actual withdrawal and re-investment.
Interest calculated thus is called Compound
Interest.
Amount
Suppandi got
after 2 years for
1000 rupees
deposited at 10%
rate of interest ?
 SIMPLE INTEREST COMPOUND INTEREST

Principal Amount =1000 Principal Amount =1000

Interest for 2 years =200 Interest in 1st year =100

Amount after 1st year =1100

Amount got after 2 years =Rs 1200 Principal Amount in 2nd =1100
year

Interest in 2nd year =110

Amount after 2 years =Rs 1210

Anu deposited 10,000 rupees in a
bank giving 10% interest annually.
Manu deposited 10,000 rupees in
another bank giving 10% interest
annually.
 After one year, Anu withdraw
the entire amount including
interest and redeposited it the
same day.
 After one more year, both
withdrew the total amounts.
Who got more ?
 1st year 2nd year
Group Total Amount
P I P I

A
10,000 1000 11000 1100 12100

B 10,000 1000 11000 1100 12100

C 10,000 1000 10000 1000 12000

D 10,000 1000 10000 1000 12000

 Who got more?
Anu Manu
Congrats
Try Again
Principal Amount Principal Amount
=10000 =10000

Interest for 1st year Interest for 2 years

=1000

=2000
Amount got after 1
=11000
year
Principal Amount Amount got after
for 2nd year =11000 2years

Interest for 2nd year =12000

=1100

Amount got after

=12100
2nd year
How much more?

a)50
b)10
c)100
d)200
Congrats
Try Again
Lets Find…..
Appu deposited 2000
rupees in a bank which
pays 5% interest
compounded annually.
How much would he get
back after two years.
Can you find the
formula for
finding compound
Interest.