Simple interest

Question

The principle P is borrowed at a simple interest rate r for a period of time t. Fine the simple interest owe for the use of the money. Assume 365 days in a year.

Answer 1

Formula for simple interest: I = P * r * (t / 365)

1. I = Interest owed.
2. P = Principal borrowed.
3. r = Annual interest rate (as a decimal).
4. t = Time period in days.

Answer 2

The basic simple interest formula is

i = p * r * t, where the rate is for one year and the time is in years.