Simple Interest
by Lily, Aug 20 2023
What is Interest?
Interest: The Magical Cost of Borrowing Money
When we borrow money from banks or private lenders, they charge us a cost for the privilege, known as interest. It is like a mystical transaction where we receive a certain amount of money, known as the principal amount, and promise to return it along with an additional sum, which is the interest.
Intriguingly, interest can be of two types: simple interest and compound interest. For now, let's delve into the magical realm of simple interest!
Concept of Simple Interest
Simple interest is a straightforward interest rate calculated on the principal amount or the remaining owed portion. Unlike compound interest, it does not take compounding into account. This mesmerizing interest can be calculated for various time periods, be it every month, week, or even every day!
All Formulas of Simple Interest
Now, let's conjure up the magical formulas for simple interest:
- Simple interest (S.I.) = (Principal amount × Rate of interest × Time) / 100
- Principal amount (P) = (Simple interest × 100) / (Rate of interest × Time)
- Rate of interest (R) = (Simple interest × 100) / (Principal amount × Time)
- Time (T) = (Simple interest × 100) / (Principal amount × Rate of interest)
Moreover, the amount (A) can be found using the formula: S.I. = A - P
Conclusion
In conclusion, simple interest is a captivating concept that allows us to explore the magical world of borrowing and lending money. By mastering the formulas and solving word problems, you can become a true sorcerer of numbers! So, keep practicing and let the magic of mathematics guide your way!