When a person
is paid interest at regular intervals on a sum of money invested,
without the interest being added to the sum invested, the investment
is called simple interest. This contrasts with compound interest
where the interest is added to the sum invested.
For example Rs.240 is invested at 5% a year, then the person investing
the money will be paid interest of 5% of Rs.240, equal to Rs.12, each
year for which the money is invested.
The formula of simple interest is
(P x R x N) / 100
where, P = amount, R = rate of interest and N = numbers of years.