This document defines and explains the key terms used in simple interest calculations: principal, rate of interest, and time. The principal is the amount of money borrowed or invested. The rate of interest is the percentage of the principal paid annually. Time refers to the number of years the principal is invested. An example is provided to demonstrate calculating simple interest earned on an investment of Rs. 10,000 at 11% interest over 5 years.
7. TERMS IN SIMPLE INTEREST
• PRINCIPAL
THIS IS THE AMOUNT OF MONEY
BORROWED OR INVESTED. It can be in
NAIRA,DOLLARS,POUNDS e.t.c….or any
currency available. IT IS USUALLY
DENOTED AS ‘P’
•RATE OF INTEREST
THIS IS A FRACTIONAL PART OF THE
PRINCIPAL THAT IS PAID ON THE
MONEY BORROWED OR INVESTMENT.
IT IS USUALLY DENOTED AS ‘P’
8. TERMS IN SIMPLE INTEREST
• TIME
THIS IS THE NUMBER OF YEARS FOR WHICH THE MONEY IS BORROWED OR
INVESTED. It is simply the duration at which the principal/money borrowed is being
invested. IT IS USUALLY DENOTED AS ‘T’ OR ‘N’.
9.
10. EXAMPLE :
JAKE INVESTED A SUM OF RS 10,000 AT A RATE OF 11%. HOW MUCH INTEREST
WILL HE GET IN 5 YEARS
