Simple Interest(S.I) :It is the interest is calculated uniformly on the original principal throughout the loan period .
When we need a large sum of money for buying house, car etc. We borrow money either by bank or by some agency . The money borrowed is called loan and we become borrower
When we borrow money in the from of loan that money we have to return in a specified period of time by giving them extra fees. This extra fees is called Interest(S.I)
Some Definitions :
Principal : Money borrowed.
Rate: is the percentage of the principal charged as interest each year. The rate is expressed as a decimal fraction, so percentages must be divided by 100.
Example :
5% = 5/100 = 0.05
Amount : The total money which the borrower pays back to the lender at the end of the specified period is called the amount.
Time : Time in years of the loan.
The simple-interest formula is often abbreviated in this form:
Interest = P x R x T
If the time is given in month then divide the given formula by 12.
Interest = ( P x R x T ) / 12 If the time is given in days then divide the given formula by 365.
Interest = ( P x R x T ) / 365
Amount (A) = Principal (P) + Interest (S.I)
Simple Interest Calculator
The following simple-interest calculator will help you determine how much interest you can earn when investing your money with a company.It is the interest is calculated uniformly on the original principal throughout the loan period . The loan period may be in years,months or in days.
Example :
1) Anita borrowed $800 for 2 years at the rate of 12% per annum. Find the interest.Also find the amount paid by her.
Solution : Principal = ’P’ = $800, Rate = R = 12% = 0.12 , Time= 'T' = 2 years.