Formula for Simple Interest

Interest is related with the money which is deposited into the bank as the cash. The banks give the interest on the deposits of customers. It is the additional income of a person who deposits the cash. The short term deposit earns fewer interests in the comparison of long term deposits. There are many types of interests which are paid by the banks. To find the interest rate some terms are used which are explained as under.

Amount money = Principal + interest

Interest = amount money – Principal

Amount money - interest = Principal

Calculations of interests :

Simple interest = (P.R.T) / 100

Rate of interest = (R X 100) / (P X T)

Example : Calculate the simple interest on the principal of Rs 4500 for the period of 5 years at the interest rate of Rs 6.75.

Solution : We are given P = 4500/-, R = 6.75/- & T = 5 years

Formula to find the simple interest I = PRT/100

Plug the values of P, R and T.

I = {4500 X 6.75 X 5) /100 = 1518.75 /-

Example : Calculate the simple interest on the principal of Rs 3000 for the period of 3 years at the interest rate of Rs 9.25.

Solution : We are given P = 3000/-, R = 9.25/-, T = 3 years

Formula to find the simple interest I = PRT/100

Plug the values of P, R and T.

I = {3000 X 9.25 X 3) /100 = 832.5 /-


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