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Simple Interest Formula

When you borrow money from a bank, there is an extra amount to be along with the amount you borrowed. That extra money that you pay is called an interest. Some money lenders and financial institutions also charge this interest for the money borrowed. There are two types of interest levied upon:

1. Simple Interest
2. Compound Interest.

Simple interest is paid at the end of a specific time period.

The formula for Simple Interest is:

\[\large Simple\;Interest=\frac{Principal\times Time\times Rate}{100}\]

Solved example

Example: Find the rate of Simple Interest, if the principal amount is Rs. 2000, time period is 1 year and rate is 10%.

Solution

As per formula we have: $Simple\;Interest=\frac{Principal\times Time\times Rate}{100}$

$=\frac{2000\times 1\times 10}{100}$

$=200$

So, the rate of simple interest is Rs. 200

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