Simple Interest Calculation Explained

This guide explains how to calculate the simple interest for a given principal amount, time period, and rate of interest. Simple interest is calculated only on the initial amount borrowed or invested.

Identify Given Values for Interest Calculation

To find the simple interest, we first need to identify the key values provided in the question:

Formula for Simple Interest

The standard formula to calculate simple interest (SI) is:

$SI = \frac{P \times T \times R}{100}$

Where:

• $P$ represents the Principal amount (the initial sum of money).
• $T$ represents the Time period in years.
• $R$ represents the Rate of interest per annum (in percent).

Step-by-Step Calculation of Simple Interest

Let's apply the formula using the values identified:

1. Substitute the values into the formula:

   $SI = \frac{400 \times 5.5 \times 12}{100}$

2. Simplify the calculation:

   First, simplify the fraction by dividing the Principal amount ($P$) by 100:

   $\frac{400}{100} = 4$

   Now, the formula looks like this:

   $SI = 4 \times 5.5 \times 12$

   Next, multiply 4 by the time period 5.5:

   $4 \times 5.5 = 22$

   The calculation is now reduced to:

   $SI = 22 \times 12$

   Finally, perform the multiplication to find the simple interest:

   $22 \times 12 = 264$

Final Simple Interest Amount

The calculated simple interest on the sum of ₹400 for 5.5 years at an annual rate of 12% is ₹264.