Simple Interest Formula
Future value
is calculated by the following simple formula
Future value
= P ( 1+ Rn)
R= rate of interest
N = number of period
P = Present value
Simple Interest Formula Example
Bank is offering a simple
rate of interest 12% (p.a) . Mr. A wants to deposit $ 25,000 today. How much
amount Mr. A will received in 4 years?
= $ 25,000 (1+ .12x4)
=$ 25,000 x 1.48
=37,000
In
simple interest the interest in not re invested therefore the interest amount
remains same for each year.
