Worked Example 1
Rs 10000 is deposited at 8% per year for 3 years.
List what you knowP = 10000, R = 8, T = 3
Put them into the formulaI = 10000 × 8 × 3 ÷ 100 = Rs 2400
Now find the amountA = 10000 + 2400 = Rs 12400
Check by years800 a year × 3 years = 2400. Each year earns exactly the same.
Worked Example 2
Rs 5000 is borrowed at 12% per year for 9 months.
Convert the time to years firstT = 9 ÷ 12 = 0.75 years
Now use the formulaI = 5000 × 12 × 0.75 ÷ 100 = Rs 450
What the wrong answer looks likeUsing 9 gives Rs 5400, which is twelve times too large.
Sense checkA full year would earn 600, so nine months must earn less. 450 is three quarters of 600.
1 more worked examples - sign in to see them all.