What is Simple Interest?
Simple interest is calculated by multiplying the principal amount, the rate of interest, and the time period (in years). It is a quick way to determine the interest on a loan or investment without considering compounding.
Formula for Simple Interest
The formula for calculating simple interest is:
Interest = Principal × Rate × Time
For example, if you invest ৳10,000 at an annual interest rate of 5% for 2 years, the interest would be calculated as:
Interest = 10,000 × 5% × 2 = ৳1,000
Therefore, the total amount after 2 years would be ৳11,000.