The money borrowed or lent out for a certain period is called the principal or the sum.
Extra money paid for using other’s money is called interest.
- Simple Interest (S.I.):
If the interest on a sum borrowed for certain period is reckoned uniformly, then it is called simple interest.
Let Principal = P, Rate = R% per annum (p.a.) and Time = T years. Then
|(i). Simple Intereest =||P x R x T|
|(ii). P =||100 x S.I.||; R =||100 x S.I.||and T =||100 x S.I.||.|
|R x T||P x T||P x R|