BANKING AFFAIRS

Detailed explanation-1: -Simple interest is an interest charge that borrowers pay lenders for a loan. It is calculated using the principal only and does not include compounding interest. Simple interest relates not just to certain loans. It’s also the type of interest that banks pay customers on their savings accounts.

Detailed explanation-2: -Simple interest is calculated only on the principal amount of a loan or deposit, so it is easier to determine than compound interest.

Detailed explanation-3: -What is Simple Interest, A = P (1+rt) The rate at which you borrow or lend money is called the simple interest. If a borrower takes money from a lender, an extra amount of money is paid back to the lender. The borrowed money which is given for a specific period is called the principal.

Detailed explanation-4: -A = P (1 + r*t) Where: A is the total amount (principal + interest), P is the principal amount, r represents the rate of interest, and t stands for time. Simple interest is a technique used to calculate the proportion of interest paid on a sum over a set time period at a set rate.

Detailed explanation-5: -Principal: The principal is the original amount borrowed for a loan or the original amount invested. Interest rate: The interest rate is the proportion of the principal that is added to the principal at each time period.