Suppose you have borrowed Rs 3200 at 3% pe r annum for 4 years. The amount of money that is borrowed for specific time is called principle. In the Rs 3200 is the principle. The interest Is paid as a percentage of the principle every year. This percentage is called as rate of interest . The rate taken as per annum that is 3% per annum. The period for which the money is borrowed is called time. Yeh additional money which is paid by the borrower to the money is called interest. Nd the money returneed to the lender after a specific time or period is called the amount. Amount is the sum of the principal and simple interest.