 # QUICK REVISION : CLASS 8 : SIMPLE AND COMPOUND INTEREST

## SIMPLE AND COMPOUND INTEREST

#### WHAT IS INTEREST?

Extra money paid by the borrower or the banks/post offices on the money kept with them for a certain period of time.

#### SIMPLE INTEREST

You have already studied simple interest in you previous classes.

In simple interest, interest is paid only on the amount borrowed or lent… but it is different in case of compound interest… we will discuss it soon…

For now lets take an example of a problem based on simple interest.

#### COMPOUND INTEREST

In compound interest, borrower not only pay interest on amount borrowed, but also pays interests on the interests every year….

So for the first year simple interest and compound interest can be the same but after 1st year compound interest paid is always greater than the simple interest paid on a certain principal….

#### Now we are going to discuss it in details with the help of some problems…

Let’s start with a simple question and then we will go to the more complex ones…..

#### BUT THE TIME IS GIVEN IN FRACTIONS

##### 4. Find CI paid when a sum of ₹ 10,000 is invested for 1 year and 3 months at % per annum compounded annually.

In this case, we cannot take n = 1 year 3 months or 1 and 1/2 years or n = 1.25, because 1.25 in power will become difficult to solve..

So here we divide question in 2 parts

• First we will find the amount and interest after 1 year with the help of compound interest formula.
• And then we will find the interest on the amount found in first part with the help of simple formula…

Let’s see HOW?

#### THE APPLICATION OF COMPOUND INTEREST

##### 8. In a Laboratory, the count of bacteria in a certain experiment was increasing at the rate of 2.5% per hour. Find the bacteria at the end of 2 hours if the count was initially 5, 06,000.

I hope this revision must have helped you in understanding the concepts of the chapter….

STUDY SMART NOT HARD

ALL THE BEST 🙂