Simple Interest Formula
The formula to calculate Simple Interest is:
Where,
- P is the Principal amount
- R is annual Rate of Interest
- T is the Time for which principal is invested
Principal
The principal is the amount borrowed or invested. It is denoted by the letter “P”. The principal remains constant while calculating simple interest whereas in compound interest the principal increase after every cycle.
Rate
The rate of interest at which the principal amount is invested or borrowed for a specific period of time is called the rate. For Example, the rate of interest can be 5%, 10%, or 13%. Here the interest rate can be represented by “R”.
Time
The duration during which the principal is borrowed or invested is referred to as time. Time is symbolized by “T”.
Amount
When a person acquires a loan from a bank, he or she is required to repay the principal borrowed plus the interest amount and the total amount repaid is referred to as the Amount. It is denoted by the letter “A”.
Thus,
- A = P + SI
- P = A – SI
- A = P(1 + RT/100)
Simple Interest
Simple Interest is the interest paid on the principal amount for which the interest earned regularly is not added to the principal amount as we do in compound interest.
Let’s learn more about Simple Interest in detail, including its formula and examples.
Table of Content
- Simple Interest Definition
- Simple Interest Formula
- How to Find Simple Interest?
- Simple Interest vs Compound Interest
- Applications of Simple Interest
- Simple Interest Solved Questions