### Theory:

Interest is the amount of money which is paid for the use of borrowed money.
Let a person '$$A$$' borrows some money from '$$B$$' for a certain period of fixed time at a fixed rate, then '$$A$$' will pay the borrowed money along with the additional money, which is called interest.

There are two types of interest:
1.      Simple interest
2.      Compound interest.
In this chapter, we are going to learn about Simple interest ($$I$$).
Before that, we should learn some basic terms deals with interest.
•           Principal
•           Amount
•           Time
Principal:
The money borrowed or lend out for a certain period is called the "principal" or the "sum".
Amount:
The sum of the interest and principle is called as the amount.
$\mathit{Amount}\phantom{\rule{0.147em}{0ex}}=\phantom{\rule{0.147em}{0ex}}\mathit{Principle}+\mathit{Interest}$

Time:
The duration of the period for which the money is borrowed is called the time.
Rate Interest per Annum:
If interest is payable yearly for every $$100$$ rupees, then it is called rate percent per annum.
Rate is denoted by $$r$$, and rate percentage is denoted by $\frac{r}{100}%=r\phantom{\rule{0.147em}{0ex}}%$.

Interest is generally given in percent for a period of $$1$$ year per annum. Suppose the bank gives an amount of $$₹100$$ at an interest rate of $$₹$$5, it is written as 5$$\%$$ per year or per annum or in short 5$$\%$$ p.a. (per annum).

It means on every $$₹100$$ borrowed, $$₹$$5 is the required interest, to be paid for every one year.
Example:
Vijay takes a loan of $$₹$$10000 at 7$$\%$$ per year as the rate of interest. Let us find the interest he has to pay at the end of $$1$$ year.

Sum borrowed $$= ₹$$10000.

Rate of interest $$=$$ 7$$\%$$ per year.

This means if $$₹100$$ is borrowed, he has to pay $$₹$$7 as interest. So, for the borrowed amount of $$₹$$10000, the interest for one year would be

$\frac{7}{100}×10000$ $$= ₹$$700.

So at the end of $$1$$ year, he has to give an amount of $$= ₹$$$10000+700$ $$= ₹$$10700.