The formula for calculating simple interest is:
Simple Interest (SI)=P×R×T100\text{Simple Interest (SI)}=\frac{P\times R\times T}{100}Simple Interest (SI)=100P×R×T
where:
- PPP is the principal amount (the initial amount of money),
- RRR is the rate of interest per annum (expressed as a percentage),
- TTT is the time period in years.
Alternatively, if the rate RRR is expressed as a decimal (for example, 5% as 0.05), the formula can be written as:
SI=P×R×TSI=P\times R\times TSI=P×R×T
The total amount AAA to be paid after time TTT including the principal and simple interest is:
A=P+SI=P(1+RT)A=P+SI=P(1+RT)A=P+SI=P(1+RT)
This formula is used to calculate the interest earned or charged on a principal amount over a period of time without compounding.