Chapter 6 · ICSE Class 5 Math

Simple Interest

When you borrow or save money, extra money is added over time — that's interest. Drag the sliders and watch the interest grow on top of the principal.

The Interest Machine
₹100
Amount = ₹1,100
Principal (blue) + Interest (orange)
₹1000
5%
2

Try it: double the Time and watch the interest double too.

A bar chart showing an amount growing year by year with simple interest Three bars of increasing height for year 1, 2, and 3, showing the principal growing as interest adds up each year Year 1 Year 2 Year 3
6.1

Principal, Rate, and Time

When you deposit money in a bank, they pay you extra money over time called interest. The Principal (P) is the original sum of money. The Rate (R) is the percentage of interest charged per year. The Time (T) is how many years the money is kept.

Everyday example — If you keep ₹1,000 in a bank at 5% interest per year, after 1 year the bank adds ₹50 to your account — that's simple interest. Try setting the Interest Machine above to P = 1000, R = 5%, T = 1.
6.2

The Simple Interest formula

Formula
SI = P × R × T ÷ 100

Principal × Rate × Time, divided by 100.

Principal (P)
The original amount

The money deposited or borrowed.

Rate (R)
% per year

How much interest is added each year.

6.3

Finding the Amount

1Amount = Principal + Interest

The total money you have at the end is called the Amount (A). It's simply the Principal plus the Simple Interest earned.

A = P + SI

2Example

Principal = ₹800, SI = ₹120. Find the Amount.

A = 800 + 120 = ₹920

6.4

Worked examples

1Finding Simple Interest

Find the SI on ₹500 at 8% per year for 3 years.

SI = (500 × 8 × 3) ÷ 100 = ₹120

2Finding the Amount

Find the Amount on ₹1,200 at 10% per year for 2 years.

SI = (1200 × 10 × 2) ÷ 100 = ₹240, so A = 1200 + 240 = ₹1,440

3Finding the Time

₹600 earns ₹90 interest at 5% per year. Find the Time.

90 = (600 × 5 × T) ÷ 100, so T = 3 years

Watch out — Always divide by 100 at the end. And remember, Rate is "per year" — if the question asks for 2 years, Time = 2, not the rate multiplied by itself.
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