The money borrowed or lent out for a certain period is called the principal or the sum.
Extra money paid for using other’s money is called interest.
- Simple Interest (S.I.):
If the interest on a sum borrowed for certain period is reckoned uniformly, then it is called simple interest.
Let Principal = P, Rate = R% per annum (p.a.) and Time = T years. Then
(i). Simple Interest =
(ii). P =