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?

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.