Money borrowed from commercial banks comes at a cost. This extra amount of money that a borrower has to pay back is known as interest, and the original sum is called principal. And the rate at which a customer borrows money from the bank is known as an interest rate.
A typical simple interest calculator comes with a formula box where the user is required to enter details such as the principal amount, the time period for which interest needs to be calculated, and the rate of interest.
