What is the formula of simple interest?
- अरुण कुमार
- Posted on
Simple interest is a way of calculating the interest on a loan or an investment.
The formula for simple interest is:
I = P * r * t
where
- I is the interest,
- P is the principal amount,
- r is the interest rate as a decimal,
- and t is the time in years.
For example,
if Sakshi borrow 1000 Rupee at an interest rate of 5% (percent) per year for only 2 years, the simple interest would be:
I = Rs. 1000 * 0.05 * 2 = 100 Rupees
So, the total amount Sakshi would need to pay back would be Rs. 1000 + Rs. 100 = 1100 Rupee.