SIMPLE INTEREST GUIDE
How to use the simple interest formula
Simple interest is based only on the original principal. It does not add earlier interest to the balance for future periods.FORMULA
simple interest = principal × annual rate × time ÷ 100WORKED EXAMPLE
For principal 1,000 at 5% per year for 3 years: 1,000 × 5 × 3 ÷ 100 = 150 interest. Total amount is 1,150.STEP BY STEP
Enter the principal
The principal is the original amount borrowed or invested before interest is added.
Use annual rate and time
Enter the annual percentage rate and the number of years. Convert months to part of a year when necessary.
Add interest to principal
The final amount equals original principal plus the simple interest result.