Simple interest Rate- What is it and How it is calculated? (Telugu)
In Simple Interest, Interest on int will not be paid.As a result of this Compounding Interest benefit is not there.
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Simple Interest Explained with an Example How to calculate it? :
Lets take a Example to understand it Better. For Example you have invested Rs.1,00,000 and received Rs.2,00,000 after 10 years. Then What is the Simple Int rate in this Investment?
As I said above, In this compounding Effect will not be there. There will be fixed interest upfront and that int will not be added to the principle amount invested.
Method to Calculate:
Let us Divide Future Value receive with amount Invested
i.e 200000/100000= 10000
So, the value is Rs.10000. Rupees 10000 means how much % in terms of Rs.1,00,000. It is 10% of Rs.1,00,000. So, 10% is Simple int. rate
Amount invested up front 1,00,000
1st year int 10,000
2nd year int 10,000
3rd year int 10,000
4th year int 10,000
5th year int 10,000
6th year int 10,000
7th year int 10,000
8th year int 10,000
9th year int 10,000
10th year int 10,000
Total = 2,00,000
Watch the video which I made about Simple int calculation in Telugu.
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