How To Calculate Simple Interest
Before we discuss about How To Calculate Simple Interest, formula to calculate interest, examples and shortcuts to find SI, we must know what is simple interest. Simple interest is a type of interest that is invested without any other factors, for the loan amount or the entire period of the loan, such as past interest (payment or fees) or any other financial considerations. Simple Interest applies to the money invested for the short term period.
SI is the short form of Simple interest and the rate of Simple interest plays a crucial role to calculate the amount of interest on the loan as well as investment. SI is generally expressed as a percentage. Simple interest is usually applies to shortterm loans for a short period of time. Simple Interest is generally applies on a year or less, which are managed by commercial companies.
Calculate Simple Interest (Simple Interest Calculator)
In this article we are guiding you about How To Calculate Simple Interest, easy short cuts to find Simple interest along with examples to Calculate Simple Interest and formulas etc. So, students who want to know complete details read this article by scrolling down the page which is well created by the dedicated team members of www.recruitmentinboxx.com
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How To Calculate Simple Interest
How to calculate Simple Interest (SI)?
Rate is the percentage of basic charge each year as interest. Rate is expressed as decimal fraction; therefore the percentage should be divided by 100. For example, if the rate is 15%, then use 15/100 or 0.15 in the formula. ‘Time’ is the time in years of the loan.
What is the formula to calculate simple interest?
Have a look on Formula to calculate simple interest (Simple Interest Formula)
Explanation: Simple interest (I) is calculated by multiplying Principal (p) times the Rate (r) times the number of Time (t) periods.
Example: You invest $100 (the principal) at a 5% annual rate for 1 year. …
5 divided by 100 = .05.
5 / 100 = .05.

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Shortcut to Calculate Simple Interest (SI)
A) Find interest owed with formula (I=Prt).
 I: Interest owed
 P: Principal or the initial sum borrowed
 R: Interest rate written as a decimal
 T: Number of time periods since loan began
B) Find total amount owed
The borrower also has to pay back initial loan, so total amount owed is equal to I+ P. You can either add them together at the end, or combine them into one equation to get total amount A=P (1+rt)
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Examples of Simple Interest
Example 1: Find simple interest on $2000 at 5% per annum for 3 years. Also, find the amount.
Solution:
Principal = $2000
Rate = 5% p.a.
T = 3 years
S.I = (P × R × T)/100
= (2000 × 5 × 3)/100
= $ 300
Amount = P + I
= $ ( 2000 + 300 )
= $ 2300
Example 2: Calculate the simple interest on $ 6400 at 10% p.a. for 9 months.
Solution:
P = $ 6400
R = 10% p.a.
T = 9 months or 9/12 years
[12 months = 1 year1 months = 1/12 years
9 months = (1 × 9)/12 years]
Therefore, S.I. = (P × R × T)/100
= (6400 × 10 × 9)/(100 × 12)
= $480
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Example 3: Mike took a loan of $20000 from a bank on 4 February 2009 at the rate of 8% p.a. and paid back the same on 6th July 2009. Find the total amount paid by Mike.
P = $20000
R = 8 % p.a.
T = 152/365
Solution:
Time = February + March +April + May + Jun + July
= 24 days + 31 days + 30 days + 31 days + 30 days + 6 days
= 152 days
Therefore, S.I. = (P × R × T)/100
= (20000 × 8 × 152)/(100 × 365)
= $ (40 × 8 × 152)/73
= $ 666.30
Therefore, the amount paid = $ (20,000 + 666.30) = $ 20666.30
Example 4: At what per cent will $ 1500 amount to $ 2400 in 4 years?
Solution:
P = $ 1500
R = ?
T= 4 years and
A = $ 2400
S.I. = A – P
= $(2400 – 1500 )
= $ 900
S.I. = (P × R × T)/100
900 = (1500 × R × 4)/100
Therefore, R = (900 × 100)/(4 × 1500) = 15%
Read Out Difference between: Simple and Compound Interest
Example 5: In how much time will a sum of money triple itself at 15 % p.a.?
Solution:
Let P = x, then A = 3x
So, I = A – P
= 3x – x = 2x
We know that S.I = (P × R × T)/100
2x = (x × 15 × T)/100
T = (2x × 100)/(x × 15) = 40/3 = 13.3 years
Example 6: At what rate percent per annum simple interest will a sum of money double itself in 6 years?
Solution:
Let P = x, then A = 2x
Also, S.I = A – P
= 2x – x
= x
T = 6 years
We know that S.I. = (P × R × T)/100
(x × R × 6)/100 = x
R = 100x/6x = 16.6 %
Also Get Here: Problems on Compound Interest
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