Calculating Simple Interest

Computation for simple interest is very easy and convenient to do since it only involves direct multiplication of the parameters. Below is the formula for getting the simple interest.

Interest = Principal x Rate x Time

Note: beginning date is not included in counting.

Example 1:
 $100

Explanation:

Principal amount is $2000.

Rate of interest is 5%.

Time to pay the principal with the interest is 1 year.

Using the formula for solving the interest;

Interest = Principal x Rate x Time

Interest = $2000 x 5% x 1

Interest = $2000 x 0.05 x 1

Interest = $100

Therefore, the man will pay $100 interest.

Example 2:
 $160,000

Explanation:

Principal amount is $400,000.

Rate of interest is 10%.

Time to pay the principal with the interest is 4 years.

Using the formula for solving the interest;

Interest = Principal x Rate x Time

Interest = $400,000 x 10% x 4

Interest = $400,000 x 0.1 x 4

Interest = $160,000

Therefore, the factory will pay $160,000 as interest.


Example 3:
 $9

Explanation:

Principal amount is $300.

Rate of interest is 12%.

Time to pay the principal with the interest is 3 months.

Converting months into years;

`3` months x `((text(1 year))/(text(12 months ))) = `(1/4 years)`

Using the formula for solving the interest;

Interest = Principal x Rate x Time

Interest = `$300` X `12%` X `1/4`

Interest = `$300` X `0.12` X `1/4`

Interest = $9

Therefore, Jenny's friend will pay $9 interest.







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