Simple Interest

Simple Interest is a fixed percentage of the amount borrowed for a period. The formula for calculation of simple interest is as follows:Interest = Principal x Rate of Interest X TimeWhere:Interest is the total amount of interest paid,Principal is the amount of money borrowedRate is the percentage of the principal charged as interest each year, expressed as a decimal fraction.If Rs. 1 bc is the money borrowed for 12 months and the ROl is 12% p.a, then what would be the Interest paid by the borrower to the lender?By applying the above formula, let us calculate the amount of interest payable in the above illustration.Answer- Interest = Rs. 1 ,00,000 x 1 2/1 00 x 1 yearAnswer= Rs. 12,000