Description: Terms and Formulas
SIMPLE INTEREST
DEFINITION
- Simple Interest is the interest paid or charged on a sum of money at a particular rate % per annum.
- Simple Interest is paid or charged only on the sum of money and not on its interest.
- Simple Interest (S.I.) = Principal (P) x Rate (R) x Time (T) / 100
PRINCIPAL
- The sum of money on which the interest is paid or charged is called the Principal.
- Principal (P) = (S.I x 100) / (R x T)
RATE
- The percentage of interest paid or charged per annum is called the Rate of Interest.
- Rate (R) = (S.I x 100) / (P x T)
TIME
- The period (in years) for which the principal is deposited or borrowed is called Time
- Time (T) = (S.I x 100) / (P x R)
AMOUNT
- The sum total of the Principal and the Simple Interest is called the Amount.
- Amount (A) = Principal (P) + Simple Interest (S.I.)
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