What is the formula for Simple Interest?+
Simple Interest Formula: SI = (P × R × T) / 100. Where P = Principal amount (initial investment or loan), R = Rate of interest per annum (in percentage), T = Time period in years. Total Amount = P + SI. Example: ₹10,000 at 8% for 3 years: SI = (10,000 × 8 × 3) / 100 = ₹2,400. Amount = ₹12,400.
What is the difference between Simple Interest and Compound Interest?+
Simple Interest is calculated only on the original principal throughout the tenure. Compound Interest is calculated on principal + accumulated interest. For ₹1 lakh at 10% for 5 years: SI = ₹50,000 total interest. CI (annually) = ₹61,051 total interest. The longer the tenure and higher the rate, the more CI exceeds SI.
How to find the principal from Simple Interest?+
To find Principal: P = (SI × 100) / (R × T). Example: If SI = ₹6,000, Rate = 8%, Time = 3 years: P = (6,000 × 100) / (8 × 3) = 6,00,000 / 24 = ₹25,000. Our calculator can find P, R, or T when SI and two other values are known.
How to find the rate of interest from Simple Interest?+
To find Rate: R = (SI × 100) / (P × T). Example: SI = ₹4,000 on principal ₹20,000 for 2 years: R = (4,000 × 100) / (20,000 × 2) = 4,00,000 / 40,000 = 10% per annum.
Where is simple interest used in real life?+
Simple interest is used in: Car loans and personal loans (sometimes), Short-term loans from moneylenders, Post Office savings schemes, NSC (National Savings Certificate) for 5-year tenure, Some cooperative bank deposits, Bridge loans, and pawn shop lending. Banks prefer compound interest for most products as it generates more revenue.