Topic Content:
- Simple Interest
Simple interest is a quick, easy and efficient method of calculating the interest charge on a loan or the principal amount (P) that was borrowed or lent. It is the fee paid on an amount of money, P, whether it’s loaned, borrowed, or invested.
Simple interest can be calculated using the formula.
I = \( \frac{PRT}{100} \)
Where
I = simple interest
P = Principal
R = Rate (% per annum)
T = Time (in years).
Example 11.1.1:
Calculate the simple interest of ₦10000 (the principal) borrowed for 1 year at a rate of 4% per annum
Solution
I = \( \frac{PRT}{100} \\ = \frac{10000 \: \times \: 4 \: \times \: 1}{100} \)
= ₦400.00
Example 11.1.2:
₦15000 was invested at a 6% per annum Rate for 1 year. What is the Simple Interest?
Solution
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