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.
Amount=Principle+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 r100%=r%.
 
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
 
7100×10000 \(= ₹\)700.
 
So at the end of \(1\) year, he has to give an amount of \(= ₹\)10000+700 \(= ₹\)10700.