Simple Interest Calculation Explained

This section explains how to calculate the simple interest (SI) based on the given principal amount, interest rate, and time period.

Simple Interest Formula

The formula used to calculate Simple Interest is:

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

Where:

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

Step-by-Step Calculation

Given values:

• Principal ($ P $) = ₹10,000
• Rate ($ R $) = 12% per annum
• Time ($ T $) = 5 years

Substitute the values into the Simple Interest formula:

$ SI = \frac{10000 \times 12 \times 5}{100} $

Simplify the calculation:

$ SI = \frac{600000}{100} $

$ SI = 6000 $

The calculated simple interest is ₹6,000.