Rate formula

About Rate formula

The interest rate, which is a percentage of the principal amount, charged by the lender or bank to the borrower for the use of its assets or money for a specified time period can be calculated using the interest rate formula. The interest rate is the amount a bank pays its depositors for maintaining money in a savings account, recurring deposit, or fixed deposit, and we' ll go through the interest rate formula in this section.

What is the interest rate formula?

The interest rate formula is used to calculate the amount of money that must be repaid on a loan as well as the interest earned on fixed deposits, mutual funds, and other investments. The interest rate formula is also useful for calculating credit card interest. The following formula can be used to compute the simple interest rate for a given amount:

Interest Rate = (Simple Interest × 100)/(Principal × Time)

The following formula can be used to calculate the compound interest rate for a given amount:

Compound Interest Rate = P (1+i)t – P

Interest rate formula

In terms of simple interest, the interest rate formula is: (Simple Interest 100)/(Principal × Time) = Interest Rate

In terms of compound interest, the interest rate formula is: P (1+i) t – P Compound Interest Rate

P is the main amount. t = time period I = rate of interest

Examples Using Interest Rate Formula

Example 1:If Ayush lends Rs 5000 on SI and obtains Rs 6000 after a year then find the rate of interest.

Solution:Principalamount= Rs 5000 (given)

Simple interest =6000- 5000= 1000

Time = 1 year

Using the interest rate formula,

Interest Rate = (Simple Interest × 100)/(Principal× Time)

Interest Rate = (1000× 100)/(5000× 1)

Interest Rate = 20%

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Rate formula

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