Simple Interest Calculator

What is Simple Interest Calculator?

A Simple Interest Calculator is a tool or utility used to calculate the interest earned or paid on a loan or investment based on a fixed rate over a specified period of time. Unlike compound interest, simple interest is calculated only on the initial principal, not on the accumulated interest.

Principal (Initial Amount):

• The principal is the initial sum of money that is either invested or borrowed.
• This amount will serve as the base for interest calculations.

Interest Rate:

• The interest rate is the percentage of the principal that will be earned or paid over a specified period.
• It is usually expressed as an annual percentage rate (APR).

Time (Duration):

• Time refers to the length of the period during which the interest is calculated.
• It is typically measured in years but can be adjusted for months or days.

Simple Interest Formula:

• The formula to calculate simple interest is:
  I = P × r × t
• Where:
  I = the interest
  P = the principal amount
  r = the annual interest rate (decimal)
  t = the time the money is invested or borrowed, in years

Total Amount (Principal + Interest):

• The total amount, or future value, is calculated by adding the interest to the principal:
  A = P + I

For example, if you invest ₹1,000 at an annual interest rate of 5% for 3 years, the simple interest would be calculated as:
I = 1000 × 0.05 × 3 = ₹150
The total amount after 3 years would be:
A = 1000 + 150 = ₹1,150