how to do simple interest and profit and loss
Answers
Simple Interest is an easy method of calculating the interest for a loan/principal amount. Simple interest is a concept which is used in most of the sectors such as banking, finance, automobile, and so on. when you make a payment for a loan, first it goes to the monthly interest and the remaining goes towards the principal amount.
What is Simple Interest?
Simple Interest (S.I) is the method of calculating the interest amount for some principal amount of money. Have you ever borrowed money from your siblings when your pocket money got exhausted? Or lent him maybe? What happens when you borrow money? You use that money for the purpose you had borrowed it in the first place. After that, you return the money whenever you get the next month’s pocket money from your parents. This is how borrowing and lending work at home. But in the real world, money is not free to borrow. You often have to borrow money from banks in the form of a loan. During payback, apart from the loan amount, you pay some more money that depends on the loan amount as well as the time for which you borrow. This is called simple interest. This term finds extensive usage in banking.
Simple Interest Formula.
The Formula for simple interest helps you to find the interest amount if the principal amount, rate of interest and time periods are given.
Simple interest formula is given as
SI = (P × R ×T) / 100
Where SI = simple interest
P = principal
R = interest rate (in percentage)
T = time duration (in years)
Inorder the calculate the total amount, the following formula is used:
Amount (A) = Principal (P) + Interest (I)
Where,
Amount (A) is the total money paid back at the end of the time period for which it was borrowed.
Answer:
Profit or Gain = S.P. – C.P. Loss: If the selling price is less than the cost price, the difference between them is the loss incurred. Formula: Loss = Cost price (C.P.) – Selling Price (S.P.) Profit or Loss is always calculated on the cost price.