💰 Simple Interest Calculator
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📌 Understanding Simple Interest
Simple interest is calculated using the formula:
- SI = (P × R × T) / 100
- Where:
- P = Principal amount
- R = Annual interest rate
- T = Time in years
📌 Example Calculations
| Principal (P) | Rate (R%) | Time (T) Years | Simple Interest (SI) |
|---|---|---|---|
| $1,000 | 5% | 2 | $100 |
| $5,000 | 4% | 3 | $600 |
| $10,000 | 6% | 5 | $3,000 |
🔧 Practical Applications of Simple Interest
1. Loans & Borrowing: Used to calculate loan interest in banks.
2. Savings & Investments: Helps in determining interest earnings.
3. Financial Planning: Useful for budgeting and financial forecasting.
❓ FAQs
Q1: How do I calculate simple interest?
✅ Use the formula SI = (P × R × T) / 100
Q2: What is the difference between simple and compound interest?
✅ Simple interest is calculated only on the principal amount, while compound interest is calculated on both the principal and accumulated interest.
Q3: Can simple interest be negative?
✅ No, interest is always a positive value unless the rate is negative.
Q4: Where is simple interest commonly used?
✅ It is widely used in loans, savings, and short-term investments.
Q5: Why is simple interest important?
✅ It helps in understanding how much extra money is paid or earned over time.