## Simple Interest, Future Value – Concept, Formula with Numerical

**[Watch video for detailed explanation of concept, formula of simple interest]**

In simple interest, the interest for a sum borrowed for a certain period is reckoned uniformly. That is at each period the interest will be same. Or the interest once credited doesnot itself earn further interest. It is calculated as a simple percentage of the original principal amount. Formula for calculating simple interest is

*SI = nPi*

Where,
“*P*” is original principal, “*i*” is the interest rate per time period
in decimals and “*n*” is the number of
time periods.

Future value is the total value of the principal after n number of periods. This is the sum of principal and the interest received during the period. Future value is given by the formula

FV = P + SI = P + (nPi) = P [1 + ni]

Where, P is the principal, i is the interest rate for a time period, and n is the number of time periods.

### Numerical

Q 1. John borrowed Rs. 24000 from a bank at a simple interest rate of 10% pa for 3 years. How much, in total he should pay back at the end of third year?

**[Watch video for solution of this numerical]**