Calculator Use
Calculate simple interest on the principal only, I = Prt. Simple interest does not include the effect of compounding.
Simple Interest Formula
I = Prt
Where:
- P = Principal Amount
- I = Interest Amount
- r = Rate of Interest per year in decimal; r = R/100
- R = Rate of Interest per year as a percent; R = r * 100
- t = Time Periods involved
Notes: Base formula, written as I = Prt or I = P × r × t where rate r and time t should be in the same time units such as months or years.
Time conversions that are based on day count of 365 days/year have 30.4167 days/month and 91.2501 days/quarter. 360 days/year have 30 days/month and 90 days/quarter.
Simple Interest Formulas and Calculations:
This calculator for simple interest-only finds I, the simple interest where P is the Principal amount of money to be invested at an Interest Rate R% per period for t Number of Time Periods. Where r is in decimal form; r=R/100. r and t are in the same units of time.
- Calculate Interest, solve for I
- I = Prt
- Calculate Principal Amount, solve for P
- P = I / rt
- Calculate rate of interest in decimal, solve for r
- r = I / Pt
- Calculate rate of interest in percent
- R = r * 100
- Calculate time, solve for t
- t = I / Pr
What is simple interest?
In simple interest we will learn about how to calculate simple interest. We will recapitulate the formula for simple interest and know more about it. When we borrow money from any source (bank, agency, moneylender), we have to pay back the money after a certain period along with extra money for availing the facility to use the money borrowed.
What is Simple Interest?
● The money borrowed is called the principal (P).
● Extra money paid back is called the simple interest (S.I).
● Interest is expressed as rate par cent per annum (p.a.) i.e., 12% per month means, the interest on $100 for 1 year is $12.
● The total money paid back after the given time is called the amount.
● Time for which money is borrowed is called the time period.
We already know what is simple
interest and while calculating the time period we need to:
Day on which money is borrowed is not counted but the day which the money is returned is counted.
When number of day is converted into year, we always divide the number of days by 365, whether it is a leap year or an ordinary year.
Here,
P = Principal
R =
rate% per annum
T = time
I = simple interest
A = amount
Formula for calculating simple interest is S.I = (P × R × T)/100
Important: Formula for calculating amount is A = P + I
Examples on simple interest:
What is Simple Interest?
1. Find simple interest on $2000 at 5% per annum for 3 years. Also, find the amount.
Solution:
Principal = $2000
Rate = 5% p.a.
T = 3 years
S.I = (P × R × T)/100
= (2000 × 5 × 3)/100
= $ 300
Amount = P + I
= $ ( 2000 + 300 )
= $ 2300
2. Calculate the simple interest on $ 6400 at 10% p.a. for 9 months.
Solution:
P = $ 6400
R = 10% p.a.
T = 9 months or 9/12 years
[12 months = 1 year
1 months = 1/12 years
9 months = (1 × 9)/12 years]
Therefore, S.I. = (P × R × T)/100
= (6400 × 10 × 9)/(100 × 12)
= $480
3. Mike took a loan of $20000 from a bank on 4 February 2009 at the rate of 8% p.a. and paid back the same on 6th July 2009. Find the total amount paid by Mike.
P = $20000
R = 8 % p.a.
T = 152/365
Solution:
Time = February + March +April + May + Jun + July
= 24 days + 31 days + 30 days + 31 days + 30 days + 6 days
= 152 days
Therefore, S.I. = (P × R × T)/100
= (20000 × 8 × 152)/(100 × 365)
= $ (40 × 8 × 152)/73
= $ 666.30
Therefore, the amount paid = $ (20,000 + 666.30) = $ 20666.30
What is Simple Interest?
4. At what per cent will $ 1500 amount to $ 2400 in 4 years?
Solution:
P = $ 1500
R = ?
T= 4 years and
A = $ 2400
S.I. = A - P
= $(2400 - 1500 )
= $ 900
S.I. = (P × R × T)/100
900 = (1500 × R × 4)/100
Therefore, R = (900 × 100)/(4 × 1500) = 15%
5. In how much time will a sum of money triple itself at 15 % p.a.?
Solution:
Let P = x, then A = 3x
So, I = A - P
= 3x - x = 2x
We know that S.I = (P × R × T)/100
2x = (x × 15 × T)/100
T = (2x × 100)/(x × 15) = 40/3 = 13.3 years
6. At what rate percent per annum simple interest will a sum of money double itself in 6 years?
Solution:
Let P = x, then A = 2x
Also, S.I = A - P
= 2x - x
= x
T = 6 years
We know that S.I. = (P × R × T)/100
(x × R × 6)/100 = x
R = 100x/6x = 16.6 %
What is Simple Interest?
7. A some amounted to $ 2520 at 10% p.a. for the period of 4 years. Find them sum.
Solution:
Let A = $ 2520
R = 10% p.a.
T = 4 years
P = ?
Let the principal be x
S.I = (x × 10 × 4)/100 = 2x/5
A = P + I
A = x + 2x/5
A = (5x + 2x)/5 = 7x/5 [But given that A = $2520]
7x/5 = 2520
7x = 2520 × 5
x = (2520 × 5)/7 = $ 1800
8. Ron borrowed $ 24000 from his friend at the rate of 12% per annum for 3 years. At the end of the period, he cleared the account by paying $ 10640 cash and giving the cow. Find the price of the cow.
Solution:
Here, P = $24000
R = 12% p.a.
T = 3 years
S.I. = (P × R × T)/100
= (24000 × 12 × 3)/100 = $ 8640
Amount = $24000 + 8640 = $ 32640
Now, $10640 + Price of cow = $ 32460
Therefore, price of the cow = $ 32460 - 10640 = $ 22000
What is Simple Interest?
● Simple Interest
What is Simple Interest?
Calculate Simple Interest
Practice Test on Simple Interest
● Simple Interest - Worksheets
Simple Interest Worksheet
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