# Simple Interest Calculator

Use the simple interest calculator below to quickly calculate simple interest on a principal amount. The simple interest formula implemented in this simple interest loan calculator is used to calculate accrued interest on a loan or savings account that is computed with the simple interest model.

Principal
Interest Rate
%
Time

### Simple Interest:

• Simple Interest Formula
• Simple Interest Example Calculations
• Simple Interest Definition

## Simple Interest Formula

The simple interest formula is actually quite simple (pun intended).

I = P(r)(t)  where

I = the simple interest accrued
P = the principal amount (amount of the loan or account value)
r = the interest
t = time period of the loan

It is important to note that the rate and time period should equal eachother – meaning if my rate is a yearly rate, the time should also be represented in years.

## Simple Interest Example Calculations

A quick example of simple interest would look like the following scenario:  I have \$5000 in a savings account with a fixed interest rate of 10% – what is the value of the accrued interest after five years.  With the simple interest formula, we would have \$5000 x .10 x 5 = \$2500

This means that according to simple interest, my account value would be \$7500 after 5 years.

## Definition of Simple Interest

Simple interest is a simplistic, non-compounding method of calculating the interest charge on a loan. Simple interest is determined by multiplying the interest rate by the principal by the number of periods.