Money is not free and it costs to borrow the money. Normally, the borrower has to pay an extra amount in addition to the amount he had borrowed. That is, to repay the loan, the borrower has to pay the sum borrowed and the interest.
The person giving the money is called the lender and the person taking the money is the borrower.
Principal(sum) is the money borrowed or lent out for a certain period. It is denoted by P.
Interest is the extra money paid by the borrower to the owner(lender) as a form of compensation for the use of the money borrowed.
If the interest on a sum borrowed for certain period is calculated uniformly, it is called simple interest. It is denoted by SI.
The statement "rate of interest $10\%$ per annum" means that the interest for one year on a sum of $₹100$ is $₹10.$
Amount due after T years is the total of the sum borrowed and its interest for T years. It is denoted by A.
Let principal = P, rate = R% per annum, time = T years, simple interest = SI. Then