AI Study GuruUnderstand the idea
Simple interest is extra money paid for borrowing, calculated only on the original principal. The formula is interest equals principal times rate times time divided by 100, where rate is percent per year and time is in years. The total amount to repay is principal plus interest. Convert months into years by dividing by 12 before multiplying. Always check whether the question asks for interest alone or the full amount.
See a worked example
Borrow 1000 at 5 percent per year for 2 years: interest is 1000 times 5 times 2 divided by 100, which is 100, so repay 1100. For 6 months, use time one half: 2000 at 6 percent for half a year gives 60 interest. To find the rate, use rate equals interest times 100 divided by principal times time.
A useful check
Two frequent errors: forgetting to divide by 100, and using months directly as years. Six months is one half year, not 6 years. Also read carefully whether the answer needed is interest or the total amount including principal.
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