Simple Interest
Sometimes we need to borrow money from a bank or a money lender for a specific period of time.
At the end of this period, we have to pay back the money which we had borrowed plus some additional money for using the lender’s money.
In this connection, we use the following terms.
(i)    Principal : The money borrowed by a borrower from a lender is known as principal or sum.
(ii)    Interest : The additional money paid by the borrower to the lender for using his money is called the interest.
(iii)    Amount : The total money which the borrower pays back to the lender at the end of the specific period is called amount.
Amount    =    Principal + Interest
A    =          P       +       I
(iv)    Rate : The interest on Rs. 100 for 1 year is known as the rate per annum.
(v)    Simple Interest : If interest is calculated uniformly on the original principal throughout the loan period, it is called Simple Interest. Illustration 16

Sudhir borrowed Rs. 3,00,000 at 12% per annum from a money-lender. At the end of 3 years, he cleaned the amount by paying Rs. 2,60,000 and a gold necklace. Find the cost of necklace. 