# SIMPLE INTEREST

Interest is the money paid for saving a particular amount of money.

Simple interest can be calculated using the formula

Simple interest I = PRT/100

Where P= principal, R=rate & T= time

Also total amount =principal +interest

Example 1

Find the simple interest on N60, 000 for 5 years at 9% per annum

Solution

Applying I=PRT/100 P= N 60,000 R=9% T=5 years

I = 60,000 x 9 x 5/100

= N 27,000

Example 2

A man borrows N 1,600,000 to buy a house .He is charged interest at the rate of 11% per annum. In the first year, he paid the interest on the loan. He also paid back N 100,000 of the money borrowed. How much did he pay back altogether? If he paid this money by monthly instalment, how much did he pay per month?

Solution

P= N 1,600,000   R=11% T=1 year

Interest on N 1,600,000 I =PRT/100 =1600,000 x11x1/100 = N 176,000

The total amount paid in the first year= N 100,000 + N 176,000 = N 276,000

Monthly payment =276.000/12   = N 23,000

Class work

1. Find the simple interest on the following:
2. N 10,000 for 31/2 years at 4% per annum
3. N 20,000 for 4 years at 4% per annum
4. A man got N 1,800,000 loan to buy a house .He paid interest at a rate of 9% per annum. In the first year, he paid the interest on the loan. He also paid back N 140,000 of the money he borrowed. (a) How much did he pay in the first year altogether.

## Profit and loss percent

Profit means gain, while loss is the inverse of profit.

% Profit is the percentage of the gain made from a particular product or item

% Profit = profit/cost price x 100

To find the selling price of an article

At loss = cost price  loss

At gain= cost price + profit

Example

1. A trader buys a kettle for N 800 and sells at a profit of 15%. Find the actual profit and the selling price

Solution

Profit =15 of N 800

=15 x800

= N 120

Selling price = C. + profit

= 800+120

= N 920

1. A hat is bought for N 250 and sold for N 220, what is the loss percent

Solution

Cost price C.P = N 250

Selling price = N 220

Lost= N 250- N 220 = N 30

% Loss =loss/C.P x 100%

=30/250 x100%

=300/25 =12%

Class work

1. Find the actual profit and the selling price of a material which cost #1000 sold at a profit of 15%
2. A farmer buys a land for #40,000 and sells it for N 33,000 what is the percentage loss?
3. A car that cost N 336,000 was sold at a loss of 17½%. What is the selling price

## Discount and Commission

A discount is a reduction in price of goods or items. Discount are often given for paying in cash

Commission: this is the payment for selling an item.

Examples

1. Find the discount price, if a discount of 25% is given on a market price of #9,200

Solution

Discount =25% of N 9,200

=25/100 x9, 200=2,300

1. A radio cost N 5,400 .A 12½% discount is given for cash. What is the cash price

Solution

Discount =12 ½% of N 5,400

= 25/2×100 x 5400

=25/2×100 x 5400=675

Cash price = N 5,400-675 = N 4725

1. A bank charges 2½   % commission for issuing a bank draft to its customers, if a customer obtained a bank draft for N 84,000 from the bank, calculates the total cost of the bank draft.

Solution

Commission =22% of N 84,000

5/2/100 x 84,000

=5/2×100 x 84, 000

= N 2,100

Total cost of bank draft =84,000+ N 2,000 = N 86,100

Class work

1. Find the discount price if a discount of 20% is given on a market of N 2,915
2. The selling price of a table is N 14,000, the trader gives a 25% discount for cash, what is the cash price
3. An insurance agent sells N 284,000 worth of insurance, his commission is 20% .How much money does he get

## WEEKEND ASSIGNMENT

1. Calculate the simple interest on N 200 in 2 years at 4% per annum (a) N 160n (b) N 240 (c) N 16 (d) N 260
2. Calculate the simple interest on N 20,000 for 21/2 years at 2% per annum (a) N 10 (b) N10, 000  (c) N 1000 (d) N 2000
3. Find the simple interest on N 40,000 for 1 year at 5% per annum (a) N 100 (b) N 250 (c) N 2,590 (d) N 50
4. What is the simple interest on #70,000 for 1 year at 4% per annum (a) N 2,800 (b) N 2,000 (c) N 2,400  (d) N 2,300
5. Find the simple interest on N 10,000 for 3 years at 6% per annum (a) N 1,800 (b) N 1000 (c) N     1,850 (d) N 1,200

## THEORY

1. Find the simple interest on the following
• N 55,000 for 4 years at 60% per annum
• N 25,000 for 3 years at 5% per annum