Math Made Favourable

  Understanding Simple Interest: How Money Grows Over Time. Money doesn’t stay still - it grows or increases when borrowed, saved, or invested. One of the simplest ways to measure this growth is through Simple Interest . What is Interest? Interest is the extra amount paid for using someone else’s money. When you borrow , you pay interest. When you save or invest , you earn interest. There are two main types of interest: Simple Interest (S.I.) — where interest is calculated only on the original amount (principal). Compound Interest (C.I.) — where interest is calculated on both the principal and previous interests . This post focuses on Simple Interest — the foundation for understanding all financial growth. The Formula for Simple Interest Simple Interest (S.I.) = P × R × T 100​ Where: P P  = Principal (the original amount of money) R R  = Rate of interest per year (in %) T T  = Time (in years) Worked Examples Example 1 ...