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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