Simple Interest Calculator
Calculate simple interest ($I = P \times r \times t$) for promissory notes, short-term personal loans, and compare against compound growth.
Simple Interest Formula
I = P × r × t | Maturity Value = P + I | Compound Advantage = P(1 + r)^t − (P + I)- P (Principal): Initial principal borrowed or deposited.
- r: Annual nominal interest rate expressed as a decimal (e.g. 6% = 0.06).
- t: Time period in years.
- Key Difference: Simple interest does not earn interest on previously accrued interest.
Step-by-Step Worked Example
Calculation Steps:
How to Use This Calculator
Assumptions & Limitations
- Simple interest calculations assume no reinvestment of interim interest payments.
Frequently Asked Questions
Where is simple interest used in real life?
Simple interest is commonly used in short-term promissory notes, auto loans (using simple interest amortization), peer-to-peer personal loans, and certain treasury bills.
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