How much Time will it take for an amount of Rs. 450 to yield Rs. 81 as interest at 4.5% per annum of Simple Interest?
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Updated Jul 24, 2024
How much Time will it take for an amount of Rs. 450 to yield Rs. 81 as interest at 4.5% per annum of Simple Interest?
To determine how much time it will take for an amount of Rs. 450 to yield Rs. 81 as interest at a rate of 4.5% per annum, follow these steps.
Simple Interest (S.I) is calculated using the formula
S.I = (P x R x T)/100
where P is the principal amount, R is the annual interest rate, and T is the time in years.
Principal (P) = Rs. 450
Annual Interest Rate (R) = 4.5%
Simple Interest (S.I) = Rs. 81
Substitute the given values into the Simple Interest formula
81 = (450 x 4.5 x T)/100
T = (81 x 100)/(450 x 4.5)
After performing the calculations,
T = 4 years
Thus, it will take 4 years for an amount of Rs. 450 to generate an interest of Rs. 81 at an annual interest rate of 4.5%.
Simple Interest and Time Calculation
Simple Interest (S.I) is a fundamental concept in finance and mathematics, used to determine how much interest will result on a principal amount over a period of time at a given interest rate. The basic formula for calculating simple interest is
S.I = (P x R x T)/100
where,
P is the principal amount, R is the annual interest rate, and T is the time in years
Calculating Time:
To find out how long it will take for a certain amount to generate a specific interest at a given rate, rearrange the simple interest formula to solve for time (T):
T = (S.I x 100)/(P x R)
This calculation is crucial for determining the duration needed to achieve a financial goal or meet repayment terms on a loan. By substituting the known values into the formula, one can easily compute the required time to achieve the desired interest.
Application of Simple Interest:
- Simple interest helps individuals and businesses understand how their investments or loans will grow over time. It is commonly used in savings accounts, fixed deposits, and some types of loans.
- When taking out a loan, the lender uses simple interest to calculate the total interest to be paid over the loan's term. This helps borrowers understand the cost of borrowing.
- Investors use simple interest to assess the returns on various investment options, allowing them to make informed decisions about where to invest their money.
