What is Simple Interest?

It is an interest type that calculates how much should be charged or earned on the principal amount of money lent for a certain period of time. Unlike compound interest, where the interests are calculated based on both the initial principal and the accumulated interest, in the case of simple interest, it considers only the principal amount.

Formula for Simple Interest

The formula for simple interest given as,

Using the above notation, the relation for S.I. becomes,

S.I.=

This formula can be used to calculate the missing parameters while finding the interest or total amount. Thus, the reduced forms of this formula are:

While Calculating the Interest, the relation becomes:

I = PTR/100

To Calculate the Principal Amount, the relation is:

P = (I × 100) / RT

For finding the rate of interest, the relation will be:

R = (I × 100)/ PT

R (in decimal ) = I/PT

Thus, the rate of interest in percent is given by:

R = R * 100

To get the time, formula is:

T = (I × 100) / PR

All of these formulae can be applied according to the different scenarios given.

Question Using S.I. Formula

Question: Find the Simple Interest if the principal amount is Rs. 2000, time is 1year and the rate is 10%. Also, find the total amount after 1 year.

Solution:

Using the formula of simple interest we have,

S.I. = [(P × T × r)/100]

So, from the above values,

S.I. = [(2000 × 1 × 10)] / 100

= 20000/100

=200

Thus, the simple interest at the end of 1 year will be Rs. 200.

For the amount after 1yr,

A = P + S.I.

So, A = 2000+200 = 2200

Hence, the total amount at the end of the given tenure, i.e., 1 year will be Rs. 2200.

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