Compound interest – Meaning, Formula and Solved Examples Compound interest is a way of calculating interest where the interest earned over time is added back to the principal, so that the interest in the next period is calculated on the new total (which includes the previously earned interest). This means we earn interest on the […]
Read More →What is Simple and Compound Interest Simple Interest Definition: Simple interest is the interest calculated on the original principal amount for a specific period at a fixed rate of interest. Formula: Simple Interest (SI) = (P × R × T)/100 Where: P = Principal amount (the initial amount of money) R = Rate of interest per annum […]
Read More →Simple Interest Word Problems Example 1: What is the simple interest and amount of $ 2000 at the rate of 8% per year for 2 1/2 years. Solution: Principal amount = P = $ 2000 Rate of interest per year = R = 8% Time for which it is borrowed = T = 2 1/2 year Thus, simple […]
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