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Find the Rate of Simple Interest | Class 7 | Class 8 | ICSE | CBSE - YouTube
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We have studied the concept of simple
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interest. So now let us solve a very simple
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sum in order to strengthen our
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understanding. The sum says that Riya
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borrows a sum for rupees five thousand.
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So this is the amount of money that she
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is borrowing and she pays a total amount
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of rupees 5500 after two years. So we
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have to find the rate of interest or
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in other words we have to calculate R.
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Now over here what are the things that we
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have been given. We have been given that
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the principal is equal to rupees five
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thousand because that is the money that
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Riya is borrowing. We have also been
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given the total amount that Riya is
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returning after a period of two years, so
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that is the amount. The amount is rupees
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5500 and the time, for which she is borrowing
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the money, is two years.
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So these are what we have been given. So
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over here we see that A is rupees 5500 and P
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is rupees 5,000. Now if you recall our
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previous discussion, you will remember
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that amount that is A
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is nothing but the principal
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that is P plus the extra amount of money
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that needs to be paid in order to be
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able to borrow this P and that is the
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simple interest I.
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Thus amount is equal to principal plus
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the simple interest. So over here amount
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is 5500 the principal is 5000 and we
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have to calculate the interest. So if I
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simply rearrange this equation, I will be
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able to calculate the value of interest
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that will be 5500 minus five thousand
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giving me the interest that is nothing
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but rupees
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500 which comes out to be the interest
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or the additional amount of money that
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Riya will have to pay. So the interest is
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rupees 500. Now that we have calculated
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the interest, let us proceed to calculate
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the rate of interest.
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So we have that interest is equal to
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rupees 500. Now if you recall our
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previous discussion, you will remember
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that the formula for simple interest is
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P into R into T divided by hundred where P is
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the principal, R is the rate of interest
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and T is the time for which the money is
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being borrowed. So now we simply
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substitute the values for P and T as
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well as I because we need to find out
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the value of R. So substituting the value
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of I, I get rupees 500 equal to
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by substitute the value for P that is
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5000 into R, R still unknown to us
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into T that is two years. So this is the
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equation that I get. Now I can further
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simplify this equation because the value
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I'm interested to find is R. So if I
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simply cross multiply, I will get R as 500
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into 100
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500 into 100 divided by 5,000 into 2
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divided by 5,000 into 2. So this is this rearranged
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equation for calculating the value
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of R.
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So now I can simplify this equation by
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canceling three zeros from the denominator and
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three zeros from the numerator. So I'm
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left with 50 divided by 10
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that is nothing but five percent. So five
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percent is the rate of interest at which
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Riya is borrowing the money rupees five
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thousand for a total of two years and
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the amount of money as had been given by
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the sum which she is paying back is nothing
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but the principal plus the simple
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interest that is equal to rupees 5500. So
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we found that if I, P and T are known
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then we can easily calculate the value
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of R and not only that if
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any three values
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are known to us then we can calculate
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the fourth one.
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Likewise we know that amount is equal to
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principal plus interest even in that
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case if either of two values out of all
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these three are known, we can calculate
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the third value and knowing the third
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value, we can use it to find out any
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particular value we might be needing
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from this equation.
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