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How this is calculated
Interest = (P × R × T) ÷ 100
Total = P + InterestSimple interest is calculated only on the original principal for the entire time period, using Interest = (Principal × Rate × Time) ÷ 100.
Frequently Asked Questions
What is simple interest?
Simple interest is calculated only on the original principal amount. Formula: Interest = (Principal × Rate × Time) ÷ 100.
How is simple interest different from compound interest?
Simple interest is calculated on the original principal only. Compound interest is calculated on the principal plus accumulated interest, so it grows faster.
When is simple interest used?
Simple interest is typically used for short-term loans, fixed deposits, and certain government schemes. Most bank loans use compound interest.