To calculate simple interest , use the formula:
Simple Interest (SI)=P×R×T100\text{Simple Interest (SI)}=\frac{P\times R\times T}{100}Simple Interest (SI)=100P×R×T
Where:
- PPP = Principal amount (initial amount of money)
- RRR = Rate of interest per year (percentage)
- TTT = Time the money is invested or borrowed for, in years
The total amount to be repaid or accumulated is:
A=P+SI=P×(1+R×T100)A=P+\text{SI}=P\times \left(1+\frac{R\times T}{100}\right)A=P+SI=P×(1+100R×T)
Alternatively, with the interest rate as a decimal r=R100r=\frac{R}{100}r=100R:
A=P(1+rt)A=P(1+rt)A=P(1+rt)
This formula can also be rearranged to find principal, rate, or time if the other values are known. For example, if $1,000 is borrowed for 3 years at an interest rate of 5%, the interest would be:
SI=1000×5×3100=150SI=\frac{1000\times 5\times 3}{100}=150SI=1001000×5×3=150
and the total amount to be repaid is:
A=1000+150=1150A=1000+150=1150A=1000+150=1150
This formula is straightforward and applies to simple interest where the interest does not compound over time.
