Simple Interest

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.


Principal or money invested: $

Annual interest rate:%

Time:Years Months Days



The simple interest is :

Amount is :

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.

Interest : I = P x R x T

I = 800 x 0.12 x 2

I = 192

Interest = $192

Amount: A = P + I

A = 800 + 192

Amount = $992

Simple Interest (S.I)

Finding rate when Principal and time are given
Finding time when Principal and rate are given
Solved examples on Simple-Interest

Home Page