Compute simple interest (vyaj) and total payable from principal, rate, and time. Common for trade credit and informal lending.
Simple interest (vyaj) is charged only on the original principal — P × R × T ÷ 100 — never on accumulated interest. It's the basis for most informal trade credit and short-term lending between businesses.
Because it doesn't compound, simple interest is easy to reconcile: the interest per year stays constant. That predictability is exactly why khata and udhaar arrangements use it.
₹10,000 at 12% for 2 years: interest = 10,000 × 12 × 2 ÷ 100 = ₹2,400, total repayable ₹12,400 — ₹1,200 of interest each year, flat.
Simple interest is always on the original principal, so it grows in a straight line. Compound interest adds each period's interest to the base, so it accelerates. Over long periods the gap is large; over a few months it's small.
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