Simple interest designates the amount of money that is paid back by a borrower to a lender. It denotes the fixed proportion of the money one borrows at the start. Under this plan, when one borrows a certain amount of money, he/she should pay back a higher amount than the actual money borrowed. Premeditated as a percentage of the amount borrowed and multiplied by the rate of repayment, the duration represents the likely to take in repaying the loan. In mathematics circles, it is abbreviated as S.I. = P*R*T, Where S.I. is the simple interest, P is the Principal amount borrowed, R is the Rate of repayment and T is the time or duration taken in repayment. The formulae can in turn be varied to calculate either of the constants as the case may be. This paper, therefore, examines the importance and applicability of the conception as well as its prominence to the society.
The concept of simple interest is applicable in everyday life where lending or borrowing of money was concerned. For instance, when one runs short of money, he/she might approach a friend or a lending agency for assistance. Based on this concept, he/she may get the money, and the lender will in turn get back the amount lent and the interest to add on. In effect, all the parties involved will have gained from each other.
The concept of simple interest helped the society to acknowledge that, lending/borrowing of money was supposed to be a business on its own. One could borrow money and pay back with an interest. That opened business opportunities to many members of the society.
Work Cited
Aufmann, Richard N, and Joanne S. Lockwood. Algebra: Introductory and Intermediate : an Applied Approach. Belmont, CA: Brooks/Cole Centage Learning, 2011. Print.
