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,

(i)
S.I. = (P*R*T
)/100

(ii) P=(100*S.I)/(R*T)
;R=(100*S.I)/(P*T) and T=(100*S.I)/(P*R)

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