What is Simple interest
Answers
Simple interest is a quick and easy method of calculating the interest charge on a loan. Simple interest is determined by multiplying the daily interest rate by the principal by the number of days that elapse between payments.
Generally, simple interest paid or received over a certain period is a fixed percentage of the principal amount that was borrowed or lent. For example, say a student obtains a simple-interest loan to pay one year of college tuition, which costs $18,000, and the annual interest rate on the loan is 6%.
Formula for simple interest :-
A = P (1 + rt)
A = P (1 + rt)A = final amount
A = P (1 + rt)A = final amountP = initial principal balance
A = P (1 + rt)A = final amountP = initial principal balancer = annual interest rate
A = P (1 + rt)A = final amountP = initial principal balancer = annual interest ratet = time (in years)
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