- It aids in the comparison of different
- It aids in the comparison of different investment plans, and find out which plan is the best suitable to earn great amount in the shortest period of time.
*Calculate simple interest*(interest only) on an investment or savings. - A simple interest rate calculator
- A simple interest rate calculator will necessitate you to enter certain values prior to making any definite calculations. It is the best online tool to determine and
**calculate how much interest will be charged on the principal amount**. Whenever any money is borrowed at simple interest, the rate of interest will be charged on the**principal amount**. The interest remains the same for every year, and it is analyzed from the principal amount, rate of simple interest and duration. - Simple Interest Formula
- Simple interest method is utilized to calculate the rate of interest on a loan payment. The rate of interest is dependent on the principal amount of money.
**Simple Interest (SI)**is calculated by multiplying the rate of interest rate by the principal amount and by the number of periods.**SI Interest = (P * R * T) / 100.** - Formula
- SI = (P × R × T) / 100 P (sum total) = (SI × 100) / (R × T) R (Rate/year) = (SI × 100) / (P × T) T (Time) = (SI × 100) / (P × R) Whereas, S.I. = Simple Interest, P = Principal amount of money, R = Percentage rate of interest per annum, T = Time duration
- How to calculate Simple Interest?
- Simple interest can be calculated based on the principal amount plus rate of interest build up. The formula to calculate simple interest is SI=PRT, where SI = simple interest, P = principal, R = rate of interest rate, and T = time.
- Step 1
- Determine you principal amount. The principal amount is the original money on which interest is calculated. Typically, the principal is the money borrowed by you at the beginning of the interest period.
- Step 2
- Write down the rate of interest as a decimal. The rate of interest is the percentage of the principal amount that will be paid as interest for every period the interest gets build up. The rates of interest are written down as percentages, which can be further divided by 100 to provide a decimal value.
- Step 3
- While calculating simple interest, recognize that interest gets build up at frequently-spaced time periods. For the calculation of yearly interest, these are years, and it can be also be months, weeks or days. Write down the time value as a decimal symbolizing how many time periods pass prior to the loan will be paid. In case, the agreed monthly interest is for the 20-year life of the loan, the time period will be calculated as 20 years × 12 months = 240.
- Step 4
- Loan interest calculator – Simply replace your values for P, R, and T into the formula SI = PRT. Multiply principal × rate of interest × time to
**determine the amount of simple interest on the loan acquired**. The value obtained is the money that is required to be paid on top of the principal borrowed. - Step 5
- Add the
**rate of interest**to the principal amount to get the total amount of money owed. After paying the loan, the borrower is not required to pay the interest. However, he or she is required to pay back the principal amount borrowed. In order to determine the total amount owed, simply add the value of interest to the principal amount. - Related: Compound Interest Return Calculator for Free
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