hello friends welcome to the session, in this session let’s see introduction to simple interest, now what do you mean by an interest, right so interest is something which we pay if we borrow some money from bank that is loan, on a loan we pay interest or if I am investing my money somewhere I get an interest so as you rightly said interest is nothing but returns you get on your investment or extra amount you pay on your loan now why do we pay this is because time value of money now what is time value of money that is a different chapter altogether but you just remember time value of money becomes important and that gives rise to the interest payments let’s go ahead, simple interest in simple interest as you all know we pay fixed interest every year and interest rate is typically denoted by R percent and P is my principal of course so I will pay R percent of P every year, let’s say this is my principal in initial year what will happen after year one after year one I will pay R percent of P as my interest what will happen in year 2, in year 2 again I will pay R percent of P that is the same interest I will be pay after year 2 also what will happen in year 3 and year 4 yes as you rightly guessed I will again pay R percent of P in my Year 3 and R percent of P in my Year 4 so if I am paying R percent of P every year how much interest I will pay in N Years.