1. Principal:

The money borrowed or lent out for a certain period is called the principal or the sum.

2. Interest:

Extra money paid for using other’s money is called interest.

3. Simple Interest (S.I.):

If the interest on a sum borrowed for a certain period is reckoned uniformly, then it is called simple interest.

Let Principal = P, Rate = R% per annum (p.a.) and Time = T years. Then