Results:

1. Basic Simple Interest Formula

Calculate interest earned or paid:

Where: SI = Simple Interest, P = Principal, R = Rate of interest (% per annum), T = Time period (in years)

Example: $5,000 at 8% for 3 years
SI = (5000 × 8 × 3) / 100 = $1,200

2. Total Amount Formula

Calculate total amount including interest:

Where: A = Total Amount, P = Principal, R = Rate, T = Time

Example: $2,000 at 6% for 4 years
A = 2000(1 + 6×4/100) = 2000(1.24) = $2,480

3. Find Interest Rate Formula

Calculate rate when SI, P, and T are known:

Example: $1,000 earned $300 in 5 years
R = (300 × 100) / (1000 × 5) = 6% per annum

4. Find Principal Formula

Calculate principal when SI, R, and T are known:

Example: Interest $450 at 5% for 3 years
P = (450 × 100) / (5 × 3) = $3,000

5. Find Time Period Formula

Calculate time when SI, P, and R are known:

Example: $10,000 at 7% earned $2,100
T = (2100 × 100) / (10000 × 7) = 3 years

6. Simple Interest for Different Time Periods

Example Comparison

Principal: $10,000 | Rate: 5% | Time: 5 years

Simple Interest: (10,000 × 5 × 5) / 100 = $2,500 → Total: $12,500

Compound Interest: 10,000(1.05)⁵ - 10,000 = $2,763 → Total: $12,763

Difference: Compound interest earns $263 more!

Example 1: Calculate Simple Interest

Question: Find SI on $5,000 at 6% per annum for 4 years

Given: P = $5,000, R = 6%, T = 4 years

Solution:

SI = (P × R × T) / 100

SI = (5000 × 6 × 4) / 100

SI = 120,000 / 100

SI = $1,200

Total Amount = P + SI = $5,000 + $1,200 = $6,200

Example 2: Find Interest Rate

Question: At what rate will $8,000 amount to $10,400 in 5 years?

Given: P = $8,000, A = $10,400, T = 5 years

Solution:

SI = A - P = $10,400 - $8,000 = $2,400

R = (SI × 100) / (P × T)

R = (2400 × 100) / (8000 × 5)

R = 240,000 / 40,000

R = 6% per annum

Example 3: Car Loan Calculation

Scenario: Car loan of $20,000 at 7% for 3 years

Calculation:

SI = (20000 × 7 × 3) / 100 = $4,200

Total Amount = $20,000 + $4,200 = $24,200

Monthly Payment = $24,200 / 36 months = $672.22/month

You'll pay $4,200 in interest over 3 years

Example 4: Monthly Interest Calculation

Question: Find SI on $3,000 at 9% for 8 months

Solution:

SI = (P × R × n) / (12 × 100)

SI = (3000 × 9 × 8) / (12 × 100)

SI = 216,000 / 1,200

SI = $180

What is simple interest?

Simple interest is interest calculated only on the principal amount, not on accumulated interest. Formula: SI = (P × R × T) / 100, where P is principal, R is annual interest rate (%), and T is time in years.

How do you calculate simple interest?

Use the formula: Simple Interest = (Principal × Rate × Time) / 100. Example: $1000 at 5% for 2 years = (1000 × 5 × 2) / 100 = $100. Total amount = Principal + Interest = $1100.

What is the difference between simple and compound interest?

Simple interest is calculated only on the principal amount throughout the entire period. Compound interest is calculated on both principal and accumulated interest, resulting in interest on interest. Compound interest grows faster.

How to calculate simple interest monthly?

For monthly simple interest: SI = (P × R × n) / (12 × 100), where n is number of months. Or convert months to years: n months = n/12 years, then use standard formula.

What is a simple interest loan?

A simple interest loan calculates interest only on the remaining principal balance. Common in car loans and short-term personal loans. Monthly payments include both principal and interest, reducing the principal over time.

How to find interest rate in simple interest?

Formula: Rate = (SI × 100) / (P × T). Example: If $1000 earned $200 interest in 4 years, Rate = (200 × 100) / (1000 × 4) = 5% per annum.

When is simple interest used?

Simple interest is commonly used for: car loans, personal loans, short-term business loans, certificates of deposit (CDs), some savings bonds, and educational loans. It's preferred when predictable, fixed payments are desired.