Using the simple interest formula for future value. The principal is the amount of money you deposit that you expect will grow over time. Simple interest is simply calculated finding the product of the principal amount borrowed or lent the rate of interest and the term or repayment period of the loan.
I Prt becomes r IPt Remember to use 1412 for time and move the 12 to the numerator in the formula above.
By inputting these variables into the formula 1000 times 10 times 3 years would be 300. Simple interest formula is given as. Exercise 2 Suppose you inherited a lump sum of 2 millions dollars. The Formula for simple interest helps you find the interest amount if the principal amount rate of interest and time periods are given.