1) The document discusses the concepts of simple interest and compound interest in business mathematics. It provides examples to calculate simple interest by using the formula Interest = Principal x Rate x Time/100. 2) Compound interest is calculated on the initial principal as well as accumulated interest from previous periods. It uses the formula Interest = Principal x (1+Rate)^Time - Principal. 3) The document contains examples showing how to calculate compound interest over different time periods on various principal amounts kept at given interest rates.

1. SUBJECT:- BUSINESS MATHEMATICS
TOPIC :- INTEREST
ACROPOLIS INSTITUTE OF MANAGEMENT STUDIES
& RESEARCH
SUBMITTED BY :- 1) ANANYA MANGAL
2) PALAK TRIVEDI
3) PRAYUSHI JAIN
4) AMRUTA BEDARKAR
5) CHAYA GUPTA
SUBMITTED TO :- Prof. LALIT DUBEY

2. WHAT IS AN INTEREST ?
Interest means having an ownership in property or
having a kind of right to do something with or on the
property ex:- lease
Interest is money earned when money is invested
Interest is charged incurred when a load or credit is
obtained
 2 types of interest : 1) Simple Interest 2) Compound
INTEREST

3. DIFFERENCE BETWEEN SIMPLE INTEREST &
COMPOUND INTEREST
Parameter Simple Interest Compound Interest
Definition
Interest is calculated only on the initial
principal amount.
Interest is calculated
on the initial principal
amount and the
accumulated interest
from previous periods.
Formula (Principal x Rate x Time) / 100
Principal x (1 +
Rate)^Time – Principal
Effect on Returns Linear Growth Exponential Growth
Impact of Time Interest Remains Constant
Interest Increases with
Time
Total Amount Principal + Interest
Principal + Compound
interest

4. SIMPLE INTEREST
PROCESS:- Amount = Principal x Interest Rate x Time
COMPOND INTEREST
PROCESS:- Amount = Principal (1 + rate/100)time

5. SOLUTIONS OF SIMPLE INTEREST :-
Example 1: A person borrowed Rs 60,000 for 4 years at the rate of 2.5% per annum. Find
the interest accumulated at the end of 4 years.
Solution:
Given,
Principal = Rs 60,000
Rate of Interest = 2.5 %
Time = 4 years
SI = (P × R ×T) / 100
= ( 60,000 × 2.5 × 4 ) / 100
= Rs 6000

6. Example 2: Rajesh takes a loan of Rs 20000 from a bank for a period of 1 year. The
rate of interest is 10% per annum. Find the simple interest and the total amount he
has to pay at the end of a year.
Solution;
Here,
Loan Sum = P = Rs 20000
Rate of Interest per year = R = 10%
Time (T) = 1 year
SI = (P × R ×T) / 100
= (20000 × 10 ×1) / 100
= Rs 2000
Total Amount that Rajesh has to pay to the bank at the end of the year
Amount = Principal + Simple Interest
= 20000+2000
= Rs 22,000

7. SOLUTIONS OF COMPOUND INTEREST :-
Example 1: A sum of Rs.10000 is borrowed by Akshit for 2 years at an interest of
10% compounded annually. Find the compound interest and amount he has to pay
at the end of 2 years.
Solution:
Given,
Principal/ Sum = Rs. 10000, Rate = 10%, and Time = 2 years
From the table shown above it is easy to calculate the amount and interest for the
second year, which is given by-
Amount =
Substituting the values,
A = 10000( 1 + 10 /100)2 = 10000 ( 11 /10) ( 11 / 10) = Rs. 12100
Compound Interest (for 2nd year) = A2 – P = 12100 – 10000 = Rs. 2100
Principal (1 + rate/100) time

8. Example 2:- Find the CI, if Rs 5000 was invested for 2 years at 10% p.a. compounded half-
yearly?
Solution:
We know A = P(1+R/100)n
From given data P = 5,000
R = 10%
n = 2 years
Substituting the input values we have the equation as under
A = 5000(1+10/100)2
= 5000(1+0.1)2
=5000(1.1)2
= 5000(1.21)
= Rs. 6050
Compound Interest = A-P = 6050 – 5000 = Rs. 1050