Class 8 Chapter 10: Simple and Compound Interest

# Class 8 Chapter 10: Simple and Compound Interest

Important Concepts and Formulas

1.    The money taken as loan or invested is called the principal.

2.    The additional amount that a borrower has to repay is called the interest.

3.    Simple interest is calculated only on the principal at the start.

4.    Simple Interest = P × R × T/100

5.    The interest calculated on both the principal and the accrued interest is called the compound interest.

6.  Amount (A) = P(1 + R%)n

7.    Compound Interest = [P(1 + R%)n] – P = P[(1 + R%)n – 1]
(Where P = Principal, R = annual interest rate in percentage terms, and n = number of compounding periods.)

8.      Compound Interest (C.I.) = A – P.

9.      The period after which the interest is added to the principal is called conversion period.

10.    If rates are different for the consecutive years, then amount is P(1 + R1) (1 + R2) (1 + R3)… where R1 is rate percent for 1st year, R2 is rate percent for 2nd year, R3 is rate percent for 3rd year and so on.

11. In case of depreciation, the rate R is replaced by (–R) in the formula.
So, A = P(1 + R%)n becomes A = P(1 – R%)n