Interest is the extra amount of money that has to paid for any loan or an investment. In the other word interest is the extra money paid along with the borrowed money. The interest are of two types, simple interest and compound interest. Below given interest formulas are used to find the simple interest and compound interest of any amount of money.

The interest is of two type,

1. Simple Interest: The interest paid at the end of the period.

Where,
P = Principal,
R = Rate per annum,
T = Time.

2. Compound Interest: It also calculates the accumulated interest of prior periods along with the initial principa l.
Where,
P = Principal,
R = annual interest rate,
t = time annually,
n = number of times that interest is compounded per year.

Interest Solved Problems

Some of solved examples of interest formulas are given below:

Question 1:  A sum of  $3000 is borrowed and the rate is 5%. Find the simple interest for 2 years? Solution: Given P =$3000
R = 5%
T = 2 year

Simple Interest = $\frac{P\times R\times T}{100}$

Simple
Interest = $\frac{3000\times 5\times 2}{100}$

Simple
Interest = 300

Therefore, the simple Interest for 2 years is $300. Question 2: In a bank account the principal =$1000, and bank compounds the interest twice a year at an interest rate of 5%, find the money in account at the year's end?
Solution:
Given P = $1000 = 5% n = 2 year t=1 Compound Interest =$P\left ( 1+\frac{R}{n} \right )^{nt}$Compound Interest =$1000\left (1+\frac{0.05}{2} \right)^{2\times 1}$Compound Interest = 1050.63 Therefore, the compound interest at the year end is$1050.63.