I=P×R×T/100

Therfore I=2000×5×5/1OO
=500
Therfore simple intrest is 500

Understanding Simple Interest
Simple interest is a method to calculate the interest charged or earned on a principal amount over a specified period of time. It is calculated using the formula:
Simple Interest (SI) = (Principal × Rate × Time) / 100
Where:
- Principal is the initial amount of money.
- Rate is the annual interest rate (in percentage).
- Time is the duration (in years) for which the money is borrowed or invested.
Given Data
- Principal (P) = RS2000
- Rate of Interest (R) = 5%
- Time (T) = 5 years
Calculating Simple Interest
To find the simple interest for the given data, we will substitute the values into the formula.
- Step 1: Substitute the values into the formula:
SI = (2000 × 5 × 5) / 100
- Step 2: Perform the multiplication:
SI = (2000 × 25) / 100
- Step 3: Calculate:
SI = 50000 / 100
- Step 4: Final result:
SI = RS500
Conclusion
The total simple interest earned over a period of 5 years on a principal of RS2000 at a rate of 5% is RS500.
This means that at the end of the 5 years, the total amount including the principal and interest will be:
- Total Amount = Principal + Simple Interest = 2000 + 500 = RS2500
Thus, understanding how to calculate simple interest helps in effective financial planning and investment decisions.