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Activity Discussion Math How will you calculate simple interest?

• # How will you calculate simple interest?

Posted by on May 14, 2021 at 6:54 am

How will you calculate simple interest?

When is simple interest used and when is compound interest used?

• This discussion was modified 2 years, 11 months ago by  Kidpid.
3 Members · 2 Replies
• 2 Replies
• ### Shivani

Member
May 14, 2021 at 10:47 am
1

You can calculate Interest on your loans and investments by using the following formula for calculating simple interest: Simple Interest= P x R x T Ã· 100, where P = Principal, R = Rate of Interest and T = Time Period of the Loan/Deposit in years.

• ### Manpreet

Member
May 16, 2021 at 8:58 pm
0

Simple interest is the interest given for a particular sum of money on a given rate. The sum of money is known as ‘principle’ and the interest is calculated for the given ‘rate’ for a given time.

For example, think that a person borrowed a sum of 50,000 rupees from a bank which provides an interest rate of 5% p.a. . He borrowed the money for 1 year, so what will be the amount he needs to pay at the end of this 1 year?

Well, the formula to calculate simple interest is :

(P*R*T)/100

Where

P= principle or amount of money

R= rate of interest; it is given in percentage and thus is divided by 100 while using in the formula

T= time until which the money is provided; it is calculated in year as the rate of interest is given as percentage per annum (where annum is the adverb of 1 year)

Going back to our question, we have:

P = 50,000

R= 5%

T= 1year

Thus interest (S.I.) = (50,000 * 5 * 1)/100

= 2,500 rupees

Thus the person has to return an extra 2500 rupees to the bank

The total amount to be returned = 50,000 + 2,500

= 52,500 rupees

I hope you found this helpful.

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