Formula(s):

SI = P x R x T

100

Amount Accruing (A) = Principal + S. Interest

A = P + SI

Where:

SI = Simple interest

P = Principal (The amount borrowed or loaned)

R = Rate ( Money lent at a certain per cent per annum)

T = Time ( Years Loaned)

Example 1: 

Use the information provided below to calculate the simple interest:

P = $400

R = 6%

T = 2 years  

Solution:

SI = P x R x T  

     = 400 x 0.06 x 2

    = $ 48

Example 2:

$ 9600 is invested at 8% per annum, simple interest for 5 years.

(a) What is the amount of simple interest payable?

(b) Calculate the amount accruing for the investment.

Solution:

(a) SI = P x R x T

Where:

P = $9600

R = 8%

T = 5 Years

Hence:

SI = 9600 x 0.08 x 5

= $3840

(b) A = P + I

= 9600 + 3840

= $13440

The End.