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What is Simple Interest?
Simple Interest
Simple interest is interest calculated only on the principal portion of a loan.
If P = principal, T = time in years; R = rate of interest
Then simple interest SI = $\frac{PTR}{100}$
Amount = P + SI
= P + $\frac{PTR}{100}$
= P [$1 + \frac{TR}{100}$]
Simple interest does not compound, meaning that interest is calculated only on the principal, no interest is paid on interest already accrued or accumulated on the principal.
Updated on: 10-Oct-2022
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