Interest

As based on the modern scholars of the world, the term interest can be described as extra money charged on the borrowing amount from the lender. The interest rate differs and depends on the nature and mode of the lender. Generally, the lender imposes an interest rate on the browning amount and this rate is predefined by him. In this regard, it has been seen that they include a few extra terms and conditions such as the interest amount that needs to be included in the principal amount after a certain time. Furthermore, the condition of adding the simple interest after a certain time is an introduction of compound interest.

Overview of Interest

The simple interest can be calculated by the simple formula of the percent. For instance, in case a borrower borrows 100 rupees from the lender on the simple interest of 10 percent for one year then the simple interest can be calculated by the formula of the percent and the interest is 10 rupees. In case the personnel borrows the same amount for 2 years then the interest for two years can be found by multiplication of the interest rate of one year with two, and the interest rate for two years is 20 rupees. The students or candidates of the government exam can easily deal with the problems related to the simple interest in case they know the interest definition and interest formula. The problems related to interest can become complex by the adding of modification in the nature of the problems such as adding a few extra components to calculate the interest like they have to calculate interest on the basis of 3 or 4 months or as they like instead of 1 year. 

Types of Interest

Simple and compound interest are two types of interest and it is mostly asked in the various competitive exams of the government as well as private competitive exams of the Banks and insurance companies. The key reason behind asking such kinds of problems in the exam of the Bank and the insurance company is the employees of these sectors mostly indulge in the calculation of the simple or compound interest. The calculation of the simple interest is so simple, and it can be calculated by the simple interest formula X = (Y * Rate* time)/ 100, where X is the amount of interest and Y is the borrowing amount. In the case of interest, the amount adds to the principal amount then the accrued amount can be found. A few twists in the scenario of the case of compound interest, the compound interest formula is C = Y (1 + rate / 100)m – Y, where C is compound interest amount, m is no of time in a complete period of time and Y is the principal amount.

Various Facts and Formulas Related to Interest

The interest rate can be easily calculated by the candidates of government exams of employees of companies, in case they remember the interest definition and interest formula otherwise they cannot solve the problems of compound interest or even the problems related to the simple interest. The calculation and solving problems related to interest and amount are not harder and students or employees can easily understand the philosophy and meaning of the term by solving a few questions enthusiastically. Basically, the formula is the exact definition of the terms that are used in solving such kinds of problems and they can understand the actual meaning of the term by the formula and calculation pattern. The dependency and independence of the term can be understood by the regarding formula. Moreover, the formula is derived by the correct and actual definition of terms and their relation with another term. 

Discussion on Interest

The correct meaning of the interest and the terms that are used in the problems regarding the simple interest and compound interest can be found by the relative formula. The simple and compound interest formula is derived from the correct and actual definition of all terms that are generally used in solving problems based on interest. Moreover, the simple and compound interest definition can be easily defined in the terms of the formula and all the terms can be easily understood with the help of formula and practice to solve the problems that are based on simple and compound interest.

Conclusion

The complexity of the problems regarding the interest can be enhanced by the inclusion of certain terms and fraction in the problems. In this scenario, the examinees have to focus on their calculation speed to solve such kinds of problems quickly. In order to solve such kinds of problems, the examinees need to remember the formulas of the compound and simple interest and also have to focus on their way of calculation so that they can solve the problems easily.