Could ANYONE please explain this formula to me and what the words mean...
I=prt (Intrest= principle x rate x time)
Let's suppose you borrow $500 from your parents. That's the principal. They charge you 2% annual interest. You pay them back at the end of two years.
I = 500 * 0.02 * 2
Multiply to find the amount of interest you'll pay.
Your a lifesaver! thank you so much!!
You're very welcome!
Sure! The formula you provided, I = prt, is used to calculate the amount of interest (I) earned or accrued on a principle amount (p) at a given interest rate (r) over a certain period of time (t). Allow me to explain these different components:
1. Principle (p): The principle refers to the initial amount of money that is being borrowed or invested. In terms of interest, it is the amount on which the interest is calculated.
2. Rate (r): The rate is the percentage at which interest is calculated or accrued. It represents the cost of borrowing money or the return on investment over a specific time period. The rate is typically expressed as an annual percentage.
3. Time (t): Time represents the duration for which the principle amount is borrowed or invested. It is generally measured in years, but can also be expressed in months or any other suitable unit.
By multiplying the principle (p) with the rate (r) and the time (t), the formula calculates the interest (I) earned or accrued during that specific period. The interest can be positive (for earning interest) or negative (for paying interest).
To use this formula, you need to know the principle amount, the interest rate, and the time period. Simply substitute these values into the formula, and you will get the calculated interest amount (I).