Simple Interest Calculator | Definition | Formula (2024)

FAQs

Simple Interest Calculator | Definition | Formula? ›

Simple Interest is calculated using the following formula: SI = P × R × T, where P = Principal, R = Rate of Interest, and T = Time period. Here, the rate is given in percentage (r%) is written as r/100.

Simple interest is calculated by multiplying the principal, the amount of money that is initially invested or borrowed, by the rate, the speed at which the interest grows, and the time, how long money is being invested or borrowed. In other words, the formula for simple interest is I = P R T .

Alternatively, you can use the simple interest formula I=Prn if you have the interest rate per month. If you had a monthly rate of 5% and you'd like to calculate the interest for one year, your total interest would be $10,000 × 0.05 × 12 = $6,000. The total loan repayment required would be $10,000 + $6,000 = $16,000.

The formula for calculating simple interest is: Interest = P * R * T. P = Principal amount (the beginning balance). R = Interest rate (usually per year, expressed as a decimal). T = Number of time periods (generally one-year time periods).

For example, assume you have a car loan for $20,000. Your interest rate is 4%. To find the simple interest, we multiply 20000 × 0.04 × 1 year. So, by using simple interest, $20,000 at 4% for 5 years is ($20,000*0.04) = $800 in interest per year.

What is simple interest? Simple interest is calculated by finding a percentage of the principal (original) amount and multiplying by the time period of the investment. The final value of the investment can then be found by adding the simple interest to the principal amount.

Summary. This topic uses two formulas: Interest=Principal×Rate×TimeI=PRTAmount=Principal+InterestA=P+I Principal is your starting amount of money. Rate is the interest rate in a decimal. Time is number of times the Interest is taken, usually in years.

Answer. So, the simple interest on 8000 naira for 4 years at a rate of 2% per annum is 160 naira.

The account balance after earning simple interest of $200 at a 3% rate for 5 years is $1533.33. This is calculated by first determining the principal amount and then adding the interest earned to this principal.

How much is 5% interest on $50000? ›

5% APY: With a 5% CD or high-yield savings account, your $50,000 will accumulate $2,500 in interest in one year.

For example, let's say you invest $10,000 in a simple-interest account that earns 5%. You'll earn an estimated $500 in interest and your account will be worth $10,500 after a year.