Formula

Simple interest $= \frac{P R T}{100}$

Arithmetic • Interest • Simple Interest

Formula

SI = \frac{P R T}{100}

Under simple interest, a principal

P

lent at

R %

per annum for

T

years earns interest

SI = \frac{P R T}{100}

, and the amount repaid is

A = P + SI

. The interest is the same every year because it is always charged on

P

and never on interest already earned.

How to use it

1Three of $P$ , $R$ , $T$ , $SI$ determine the fourth, so rearrange rather than re-deriving.
2When a sum is borrowed at one rate and lent at another for the same time, only the rate gap earns anything: the gain is $\frac{P ( R _{2} - R _{1} ) T}{100}$ .
3Keep $T$ in years to match a per-annum rate: $6$ months is $T = \frac{1}{2}$ , and $146$ days is $T = \frac{146}{365}$ .

Find the simple interest on Rs

8000

6%

per annum for

3

years, and the amount due.

Step-by-step

1
$SI = \frac{8000 \times 6 \times 3}{100} = \frac{144000}{100} = 1440$
Why: Substitute $P = 8000$ , $R = 6$ , $T = 3$ .
2
$A = 8000 + 1440 = 9440$

Answer

Interest Rs

1440

, amount Rs

9440

Watch out

It is NOT compound interest: for

T > 1

the two differ, and a question that says 'compounded annually' needs

A = P (1 + \frac{R}{100})^{T}

instead. A rate quoted per annum must be paired with a time in years, and a rate per period with a count of those periods.

Builds on

x %

Also known as

simple interest, SI formula, PRT/100, principal rate time, interest for n years, amount and interest