ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -If you’d like to calculate a total value for principal and interest that will accrue over a particular period of time, use this slightly more involved simple interest formula: A = P(1 + rt). A = total accrued, P = the principal amount of money (e.g., to be invested), r = interest rate per period, t = number of periods.

Detailed explanation-2: -Similar to the scenario above, calculating simple interest involves three elements: the principal balance, interest rate, and term of the loan.

Detailed explanation-3: -Simple Interest is calculated using the following formula: SI = P × R × T, where P = Principal, R = Rate of Interest, and T = Time period. Here, the rate is given in percentage (r%) is written as r/100. And the principal is the sum of money that remains constant for every year in the case of simple interest.

Detailed explanation-4: -r = R/100 = 3.875%/100 = 0.03875 per year. The total amount accrued, principal plus interest, from simple interest on a principal of $10, 000.00 at a rate of 3.875% per year for 5 years is $11, 937.50.

Detailed explanation-5: -Principal. This is the amount of money being borrowed. Rate of Interest. This is the percent to be used to calculate the additional amount to be paid along with the principal. Time.