Financial Maths Simple Interest Formula

I p 1 r n nt.

Financial maths simple interest formula. To determine the accumulated loan amount we use the simple interest formula. The formula used to calculate simple interest is i p x r x t where. R is the rate of interest per annum usually given in percentage terms but converted to decimals when applying to the formula. The graph opposite shows how 1000 will increase in value when invested at 10 simple interest over 20 years.

Learning progresses from calculating a simple interest to finding the principal amount duration and interest rate when the simple interest is known at the start of the lesson students recap calculating equivalent fractions mixed numbers decimals and percentages as this is required for the remainder of the lesson. S p i. If amount of interest of interest charged does not change doub. Interest prt or p 1 rt if interest earned during each time period is hen added to the.

In addition particulars related to certain financial instruments bonds for example are calculated using derivatives of these basic formulas. The graph gives the amount a p 𝑃𝑅𝑇 100 at the end of each year. To find the interest you can use this formula. Simple interest is represented by a straight line graph with a positive gradient.

For the above calculation you have 4 500 00 to invest or borrow with a rate of 9 5 percent for a six year period of time. If amount of interest of interest charged does not change doub. T s is the future value or maturity value. Simple interest i prt i is the amount of interest earned p is the principal sum of money earning the interest r.

A total amount at the end of the term p principal and i simple interest. When calculating simple interest the interest earned is the same for each time period. Is the simple annual or nominal interest rate usually expressed as a percentage t is the interest periodin years. Begin align a p 1 in text 5 100 text 1 text 0 12 times text 2 text r text 6 324 end align.

S p 1 r. When you know the principal amount the rate and the time the amount of interest can be calculated by using the formula. I is the interest amount in or whatever currency is relevant to you p is the principal amount borrowed or invested. Financial math formulas and financial equations financial math has as its foundation many basic finance formulas related to the time value of money.

The principal is the amount of money you borrow or invest.