Simple Interest Calculator
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What is Simple Interest?
Simple interest is calculated only on the principal amount or on the portion of the principal amount that is remained.
Simple interest is a type of interest which once credited does not earn interest on itself. It remains fixed over time.
It does include the compounding factor.
The Principal amount is constant while calculating simple interest.
Majority of the loans are usually simple interest loans.
Simple Interest formula:
A = P(1 + rt)
Where:
A = Maturity Amount (principal + interest)
P = Principal Amount
I = Interest Amount
r = Rate of Interest in decimal; r = R/100
t = Time Period
Example: An amount of $1,000 is deposited in a bank paying an annual interest rate of 5%. What is the balance after 6 years?
Here,
P = $ 1000
r = 5/100 or 0.05%
t = 6 Years
A = P(1 + rt)
A = 1000 (1 + 0.05 x 6 )
A = 1000 (1.3)
A = 1300
Balance after 6 years would be $1300, where $300 is the interest earned.