Simple Interest: Formula, Calculation & Applications: quick revision, 15 bites

Interest Is Paid on Principal Only

Interest never compounds here.

In simple interest, the interest each period is calculated **only on the original principal** — never on interest already earned.

Takeaway. Simple interest is linear: same interest every period, because the base never changes.

The Simple Interest Formula

One formula powers every SI problem.

Takeaway. Memorise SI = PRT/100 — every other SI formula is derived from it.

The Four Key Terms

Know these four words cold.

Takeaway. Every SI problem gives you three of P, R, T, SI, A — solve for the missing one.

Step-by-Step: Solving Any SI Problem

Four steps, zero confusion.

Takeaway. Standardise units before substituting — most mistakes happen at the conversion step.

Worked Example: A Real Loan

See the formula in action.

Takeaway. Equal interest every year is the signature of simple interest.

The Time-Unit Trap

Months are not years.

Takeaway. Always convert time to years before using the formula.

Simple vs Compound Interest

Same rate, very different totals.

Takeaway. SI grows in a straight line; CI curves upward — the gap widens with time.

Rearrange to Find Any Variable

One formula, four rearrangements.

Takeaway. Don't memorise three formulas — just rearrange SI = PRT/100.

Remember 'PRT over 100'

Say it like a word: P-R-T.

Chant **"P-R-T over 100"** — Principal × Rate × Time, all divided by 100. The three letters in order match the formula's numerator.

Takeaway. PRT/100 — three letters, one denominator, zero confusion.

Where You Meet Simple Interest

It's in your bank, your loan, your EMI.

Takeaway. Short-term and flat-rate loans almost always use simple interest.

Doubling Time Under SI

How fast does money double?

At **10% p.a. simple interest**, money doubles in exactly **10 years** — because SI = P when R·T = 100.

Takeaway. Under SI, doubling time = 100 ÷ R years.

Exam Patterns to Expect

These question types repeat every year.

Takeaway. Recognise the pattern first, then pick the rearranged formula.

Ratio Trick for 'SI is a Fraction of P'

Turn fractions into one equation.

When a question says *"SI is 1/4 of the principal"*, write $\frac{SI}{P} = \frac{RT}{100}$ and substitute the fraction directly.

Takeaway. SI/P = RT/100 is the master ratio for all 'fraction of principal' problems.

Don't Add Interest to Principal Midway

SI never compounds — resist the urge.

Takeaway. If you're adding interest back to P, you've switched to CI by mistake.

Why 'Per Annum' Matters

Rates are always yearly by default.

The phrase **"per annum" (p.a.)** means *per year*. If a rate is quoted without a time unit, it is assumed to be annual — so T must always be in years to match.

Takeaway. Rate and time must share the same unit — usually years.