How is interest calculated?

Interest is calculated using a formula:

I = PRT

Where:

• I is the interest
• P is the principal amount (the initial amount of money)
• R is the rate of interest per period
• T is the time the money is invested for

Here's how you can calculate interest:

1. Identify your principal amount. This is the initial amount of money you have or you borrow.

2. Determine your interest rate. This is usually given as a percentage.

3. Identify the time period for which the money is borrowed or invested.

4. Plug these values into the formula to calculate the interest.

For example, if you have $1000 (P) with an interest rate of 5% per year (R) and the money is invested for 2 years (T), the interest (I) would be:

I = PRT I = 1000 * 0.05 * 2 I = $100

So, the interest would be $100.