Introduction - Calculation of Simple Interest
Use this simple interest calculator to find A, the Final Investment Value, using the simple interest formula: A = P(1 + rt) where P is the Principal amount of money to be invested at an Interest Rate R% per period for t Number of Time Periods. Where r is in decimal form; r=R/100; r and t are in the same units of time.
The simple interest formula allows us to calculate I, which is the interest earned or charged on a loan. According to this formula, the amount of interest is given by I = Prt, where P is the principal, r is the annual interest rate in decimal form, and t is the loan period expressed in years.
To answer this question you begin by working out 5% of Rs.250 which = Rs.12.50. To calculate the amount of simple interest over 5 years you simply multiply the interest earn in year one by five - Rs.12.5 × 5 = Rs.62.5. If you deposit Rs.1,000 in a bank account which is paying 3% compound interest per year.
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