what are the formulae of simple interest?

Answer 1

Simple Interest

Let the annual rate of interest be i (as a fraction, that is 100i percent), the amount of the principal be P, the number of years be n, and the amount after n years be A. Then

A = P(1+ni).


If you want to know what principal to deposit in order to have an amount A after n years at interest rate i, that principal is called the present value, and is given by

P = A/(1+ni).


To find the interest rate i, use

i = ([A/P]-1)/n.


To determine how many compounding periods are needed to reach a given amount,

n = ([A/P]-1)/i.


Example: Suppose you deposit $6000 in a bank and receive 4% per year simple interest for 7 years. Then the parameters will be principal P = $6000, interest rate per period i = 0.04, and number of periods n = 7. The amount of interest you will have received by the end of 7 years will be Pni = ($6000)(7)(0.04) = $1680, so you will have A = $7680.

Answer 2

Simple interest: Add up all the interest paid/payable in a period. Divide that by the principal at the beginning of the period. E.g. on $100 (principal):

* credit card debt where $1/day is charged. 1/100 = 1%/day.
* corporate bond where $3 is due after six months, and another $3 is due at year end. (3+3)/100 = 6%/year.
* certificate of deposit (GIC) where $6 is paid at year end. 6/100 = 6%/year.

There are three problems with simple interest.

* The time periods used for measurement can be different, making comparisons wrong. You cannot say the 1%/day credit card interest is 'equal' to a 365%/year GIC.
* The time value of money means that $3 paid every six months hurts more than $6 paid only at year end. So you cannot 'equate' the 6% bond to the 6% GIC.
* When interest is due, but not paid, it must be clear what happens. Does it remain 'interest payable', like the bond's $3 payment after six months? Or does it get added to the original principal, like the 1%/day on the credit card? Each time it is added to the principal it 'compounds'. The interest from that time forward is calculated on that (now larger) principal. The more frequent the compounding, the faster the principal grows, and the greater the interest.

Answer 3

Step by step method plus explaination.

If you borrow at 5% from a bank $100 or Rs.100 for 1 year at the end of 1 year you need to pay bank back 100(What you borrowed)+5(promised interest for use of their money)= 105

% means for every 100 that is borrored. If it is not specified then it is for one year.( cent in french means 100, per means on)

So if it is 1000

Then

1000 divided by hundred=10

You are brrowing ten times as much so interest will be 10x5=50

So interest will be 50.

I alway take the rate of interest on every Dolar or Rs.

At 5% rate(r) is .05 that is 5 divided by 100
At 6% rate(r) is .06
.
.
A11% rate(r) is .11 that is 11 divided by 100
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Formula for Interest at the end One year will be.

Interest for a year(i) = (Monney borrowed called principal P)x (rate of interest it is called i)

eg

i = Px r

For a month it will be Pr/12
For a wk For Week it will be Pr/52
For a day it will be Pr/365
This way you can use any algibric calculator and get the answers.

Answer 4

Interest= PrincipalxNo.of Monthsxrate of interest / 100

Answer 5

Simple Interest = p*n*r/100
where p---> principle
n---> years
r--> rate

Answer 6

1.simple interest= (P*R*T)/100



wher P=principal amount(sum) borrowed
R=rate of interest per annum on the sum borrowed
T=time period(in years) for which the sum is borrowed

2.SI=A-P
where A=amount recieved by the person who lent the money
P=sum borrowed
SI=simple interest on the sum borrowed

Answer 7

S. I = PRT/100 where
P= Principal
R = Rate of intrest per annum,
T = Time in years

Answer 8

Simple Interest = (P*R*T)/100
where 'P' is the principle amount
'R' is the interest rate
'T' is the time period for which the interest is to be calculated.

Answer 9

simple interest =principle (the amount in the beginning)*rate* time period /(divided by)100 ...hey but whenever u investing money ...always go to some one who gives you compound interest...haha

Answer 10

Principle * time * rate of interest(%) divided by 100
time and rate of interest should be factored in the same units of time i.e. monthly or yearly