Simple Interest | Quantitative Aptitude for CA Foundation PDF Download

Introduction

When we secure a loan from a bank, cooperative society, or an individual institution for a specified period, we remit an additional sum beyond the borrowed amount to compensate the lender for the use of their funds. This additional sum is referred to as Interest (I), the sum borrowed is designated as Principal (P), and the duration for which the money is borrowed is known as Time (t). The total sum, inclusive of both the principal and interest, repaid to the lender is termed the Amount (A or S).
In other words
Amount = Principal + Interest
A =P + I

Simple Interest

The interest computed on the principal only (i. e. not on interest earned) for the entire period of borrowing is called Simple Interest.

Type-I
Some Important Formulae.
Simple Interest | Quantitative Aptitude for CA Foundation
Where
A = Accumulated amount
[Final value of investment]
P = Principal. [Initial value of an investment]
r = Rate of interest
t = time (years.)
I = Amount if interest

Illustrative examples:

Example 1: How much interest will be earned on ₹ 2000 at 6% simple interest for 2 years.
Ans:
I = Undefined control sequence \operatorname = ₹ 240

Example 2: Sarita deposited ₹ 50,000 in a bank for 2 years with the interest rate of 5.5% p.a. what will be the final value of Investment ?
Ans:

Simple Interest | Quantitative Aptitude for CA Foundation
Calculator Tricks:-
rate for 2 years = 2 × 5.5 = 11% .
Amount = 50000 + 11% button = ₹ 55000

Example 3: Find the rate of interest if the amount owed after 6 months is ₹ 1050 borrowed amount being ₹ 1000.
(a) 5%
(b) 10%
(c) 15%
(d) None
Ans:
(b)
SI = ₹(1050 – 1000) = ₹ 50
Simple Interest | Quantitative Aptitude for CA Foundation
Tricks: Go by choices
For (b) A = 1000 + 1000 × rate of interest of 6 months
Simple Interest | Quantitative Aptitude for CA Foundation
option (b) is correct
Calculator Tricks:- GBC
For option (b)
r = 10/2 = 5%
A = 1000 + 5% button (press) = 1050 (True)

Example 4: Kapil deposited some amount in a bank for Simple Interest | Quantitative Aptitude for CA Foundation years at the rate of 6% p.a. simple interest. Kapil received ₹ 1,01,500 at the end of the term. Compute initial deposit of Kapil.
(a) ₹ 70,000
(b) ₹ 60,000
(c) ₹ 80,000
(d) None
Ans:
(a)
Tricks : Go by Choices
For option (a)
= 70,000 + [6 x 7.5]%
= ₹ 1,01,500 (True)
Option (a) is correct.

The document Simple Interest | Quantitative Aptitude for CA Foundation is a part of the CA Foundation Course Quantitative Aptitude for CA Foundation.
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FAQs on Simple Interest - Quantitative Aptitude for CA Foundation

1. What is the concept of simple interest?
Ans. Simple interest is a financial concept that calculates the interest on a loan or investment based on the original principal amount. It is calculated as the product of the principal amount, the interest rate, and the time period.
2. How is simple interest different from compound interest?
Ans. Simple interest is calculated only on the principal amount, whereas compound interest is calculated on the principal amount as well as the accumulated interest. In simple interest, the interest remains constant throughout the time period, while in compound interest, the interest is added to the principal and the interest is recalculated for each time period.
3. How can simple interest be calculated?
Ans. Simple interest can be calculated using the formula: Interest = (Principal amount * Interest rate * Time period) / 100. By substituting the values of the principal amount, interest rate, and time period into this formula, the simple interest can be determined.
4. Can simple interest be negative?
Ans. No, simple interest cannot be negative. Simple interest is always a positive value as it represents the additional amount earned or paid on a loan or investment. If the interest rate is negative, it means that the borrower is receiving a discount or rebate on the interest, but the simple interest value itself will still be positive.
5. Is the concept of simple interest applicable to all types of loans and investments?
Ans. Yes, the concept of simple interest is applicable to various types of loans and investments. It is commonly used in personal loans, car loans, fixed deposits, and savings accounts. However, complex financial instruments such as bonds and mortgages may involve compound interest calculations rather than simple interest.
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