Simple Interest

Simple Interest Simple interest is calculated on a principal amount. The simple interest is calculated by the formula; simple interest = (P * R * T/100). Here P is the principal amount borrowed or lend. R is the rate of interest in percentage. T is the total time period. The abbreviation used for representing simple interest is SI. The Total amount that is due after the time period is the sum of the initial principal amount and the simple interest amount calculated. Example 1: Find the simple interest on the amount $ 5000 with a rate of interest 5% and what is the amount due after a time period of 2 years? Solution: Given Principal amount = $ 5000. The rate of interest percentage= 5% = 5/100 = 0.05. Time period mentioned = 2 years. Simple Interest SI = I * R *T. SI = 5000 * 0.05 * 2 = $ 500. Amount due = $ 5000 + $ 500 = $ 5500 The Amount due after 2 years = $ 5500. Example 2: Find the simple interest on the amount $ 6000 with a rate of interest 4% and what is the amount due after a time period of 3 years? Solution: Given Principal amount = $ 6000. The rate of interest percentage= 4 % = 4/100 = 0.04. Time period mentioned = 3 years. Simple Interest SI = I * R *T. SI = 6000 * 0.04 * 3 = $ 720. Amount due = $ 6000 + $ 720 = $ 6720 The Amount due after 3 years = $ 6720.