Interest for Multiple Years

If the amount is borrowed for more than one year the interest is calculated for the period the money is kept for. For example, if Anita returns the money at the end of two years and the rate of interest is the same then she would have to pay twice the interest i.e.,₹750 for the first year and ₹ 750 for the second.

This way of calculating interest where principal is not changed is known as simple interest.

As the number of years increase the interest also increases.

For &₹ 100 borrowed for 3 years at 18%, the interest to be paid at the end of 3 years is 18 + 18 + 18 = 3 × 18 = ₹ .

We can find the general form for simple interest for more than one year.

We know that on a principal of P at R% rate of interest per year, the interest paid for

one year is R×P100. Therefore, interest I paid for T years would be

And amount you have to pay at the end of T years is A = P + I

quantities in the relation I = P×R×T100, you could find the remaining quantity. Continue

EXAMPLE 13

If Manohar pays an interest of ₹ 750 for 2 years on a sum of ₹ 4,500, find the rate of interest.