Simple Interest is dependent on :
1. Principal
2. Rate of Interest
3. Time Period
So, we get the following Formula :
Simple Interest = (Principal X Rate X Time) / 100
OR SI = (PRT) / 100
Let solve following problems for further understanding:
Problem 1 - Find interest on Rs 1000 for 2 years at 5% rate
Answer -
Principal = Rs 1000
Time = 2 years
Rate of interest = 5%
Simple Interest = (PRT) / 100
Simple Interest = (1000 X 2 X 5) / 100
Simple Interest = Rs 100
Problem 2 - Find interest on Rs 2000 for 2.5 years at 10% rate
Answer
Principal = Rs 2000
Time = 2.5 years
Rate of interest = 10%
Simple interest = (PRT) / 100
Simple interest = (2000 X 2.5 X 10) / 100
Simple interest = Rs 500
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