We can define simple interest as the interest on a loan or investment calculated only on the amount initially invested or loaned.
Formula to calculate simple interest.
We calculate simple interest by multiplying the principal (p) by the rate of interest (r) multiplied by time taken (t) in years.
Example:
A trader borrowed $ 1000 from a money lending company, he was to pay it back in 5 years at a 5% interest rate. Calculate the simple interest.
Therefore, the simple interest is $ 100.
