definition of simple discount and examples

Simple discount is a method used to calculate the amount of deduction or reduction from the original price when the payment is made before the due date. The formula to calculate the simple discount is:

\text{Simple discount} = \text{principal} \times \text{rate} \times \text{time}

where:
- Principal is the original amount borrowed or invested
- Rate is the interest rate
- Time is the time in years for which the money is borrowed or invested

Example:

Let's say you borrow $1000 at a simple discount rate of 5% for 3 years. Calculate the simple discount.

Using the formula:

\text{Simple discount} = 1000 \times 0.05 \times 3 = 150

Therefore, the simple discount is $150.

\textbf{Answer:} The simple discount is $150.