HOW TO SOLVE SIMPLE INTEREST PROBLEMS

Interest is the 'charge' or' fee' or the extra 'money' paid on a borrowed sum of money. It is paid by the borrower to the source of credit.

This is computed in 2 ways:

• Simple interest is where the interest is calculated upon the 'initial amount' or the 'principal' amount borrowed
• Compound interest is where the interest is calculated on the principal amount along with the 'accumulated interest' amount over a time period

The 'Rate' is the percentage stated by the source of credit for the borrower. The Rate can be calculated for a particular interest amount.

Simple Interest word problems have 3 components stated in them:

• Principal- initial amount
• Time- the period of interest payment
• Rate- the percentage

The formula for calculation of S.I is given by:

S.I -P*N*R/100
P-Principal
N-time
R-Rate of interest