Simple Interest Method Math

When the amount of interest the principal and the time period are known you can use the derived formula from the simple interest formula to determine the rate as follows.

Simple interest method math. P principle i daily interest rate n number of days between payments begin aligned text simple interest p times i times n textbf where. Where p amount of loan. Suppose you give 100 to a bank which pays you 5 simple interest at the end of every year. Simple interest p i n where.

The principal is the amount of money you borrow or invest. Simple interest formula is written as. Interest principal rate of interest time. Si p r t 100.

This is different from compound interest where interest is calculated on on the initial amount and on any interest earned. And n is the duration of the loan. I is the daily interest rate. To find the interest you can use this formula.

If you want to calculate simple interest over more than 1 year calculate the interest earnings using the principal from the first year multiplied by the interest rate and the total number of years. For example to convert 5 into a decimal divide 5 by 100 and get 05. Simple interest is when the interest on a loan or investment is calculated only on the amount initially invested or loaned. After one year you will have 105 and after two years you will have 110.

R interest rate in percentage t time duration in years. When someone pays simple interest i he or she pays interest on the principal only not on the interest that has already been paid. I prt becomes r i pt remember to use 14 12 for time and move the 12 to the numerator in the formula above. Simple interest is determined by multiplying the daily interest rate by the principal by the number of days that elapse between payments.

Where si simple interest. Or just move the decimal point two spaces to the left. The formula for simple interest helps you find the interest amount if the principal amount rate of interest and time periods are given. Get your calculator and check to see if you re right.

Simple interest calculator simple interest is calculated only on the initial amount principal that you invested.