Simple Interest: P × R × T ÷ 100

What is Simple Interest?

Simple Interest (SI) is interest charged only on the original amount borrowed or invested, called the Principal (P). The interest does not earn further interest.

Formula

SI = (P × R × T) / 100

• P = Principal (₹)
• R = Rate of interest per annum (%)
• T = Time in years

Amount (A) = P + SI

Worked example

P = ₹5,000, R = 8% p.a., T = 3 years.

SI = (5000 × 8 × 3) / 100 = ₹1,200. Amount = 5000 + 1200 = ₹6,200.

Exam tips (SSC CHSL)

1. Convert months to years: 9 months = 9/12 = 0.75 year.
2. SI is the same every year, so SI for 1 year = total SI ÷ T.
3. If a sum doubles in T years at SI, then R × T = 100.
4. Finding P: P = (SI × 100) / (R × T).

Analogy

Think of renting a bicycle. The shop charges a fixed rent per day based only on the bicycle's price (the Principal). Keep it 1 day or 5 days — the daily rent never grows; you simply multiply the daily rent by the number of days. Simple Interest works the same way: the same fixed interest every year, calculated only on the original sum.