ICSE Guess > ICSE/ISC eBooks > Class X > Maths by Mr. M. P. Keshari

ICSE / ISC eBooks

Some Important Terms

1. Principal : The money borrowed, lent or deposited in a bank for a certain period of time is called the principal or the sum.
2. Amount : The sum total of principal and interest after a specified time is called the amount.
3. Interest : Extra money given by the bank or borrower or given to the lender is called the interest.
   (a) Simple interest : In simple interest, the interest is calculated uniformly on the original principal throughout the loan perid.

   Using the formula:
   
   Where, S. I. = Simple Interest
   P = Principal
   R = Rate of interest
   T = Time in year

   (b) Compound interest : In this case, interest is calculated for a given unit of time called conversion period and then the interest is added to the previous principal to get new principal. Again interest is calculated and added is calculated and added to the principal and so on.
   The different interest so obtained is added to get compound interest.
   
4. Rate : Rate means rate of interest which is generally specified as a percentage per year or half year.
5. Time : The period for which money is borrowed or lent or deposited in a bank is called time. Generally time is taken in year.