Simple Interest is calculated as A = P (1 + rt)
It is the simple interest rate at which a borrower or lender borrows money. When a borrower borrows money from a lender, he or she pays the lender an extra amount of money. The borrowed money is called the principal and the interest is the extra amount owed to the lender in return for the money being used.
There is no compound interest with simple interest, and you do not pay interest on interest. To calculate the simple interest rate, multiply the principal amount by the number of periods and the interest rate. Simple interest payments are applied to the interest for each month, and the remainder to the principal.
How does a Simple Interest Calculator work?
Calculating simple interest on a loan or savings account without compounding is possible with a simple interest calculator. Simple interest is calculated daily, monthly, or yearly based on the principal amount. If you enter the principal amount, interest rate, and period in days, months, or years, the calculator will display interest on the loan or investment.
What is the process of using Simple Interest Calculators?
In this simple interest calculator, principal and interest are added together to calculate the accrued amount. In order to calculate interest, the following formula is used:
A = P (1+rt)
P = Principal Amount
R = Rate of interest
t = Number of years
There are two types of accrued interest: principal and interest.
Interest = A – P.
The following example illustrates how the simple interest calculator works. The principal amount is Rs 10,000, the interest rate is 10%, and the number of years is 6. As a simple interest calculation, you can use the following formula:
The value of Rs 16, 000 is equal to 10,000 (1+1.06).
The interest rate is equal to A – P = 16000 – 10000 = Rs 6,000.
How to Use the Simple Interest Calculator?
With the Simple Interest Calculator, you can find out how much interest you have earned on any deposits you have made. To use the Simple Interest Calculator, follow these steps:
- Simple interest is the only type of interest you can select.
- Enter the amount of the principal.
- The annual interest rate is then entered.
- Choose from days, weeks, quarters, or years for the duration.
- Calculate the simple interest you’ve earned on a deposit using the Simple Interest Calculator.
Simple Interest Calculator Benefits
- Instantly calculate the simple interest on your deposit with the Simple Interest Calculator.
- A loan’s interest rate can be calculated by comparing simple interest rates against compound interest rates.
Frequently Asked Questions (FAQs) about Simple Interest Calculator
- Is it necessary to choose the frequency of compounding when using the Simple Interest Calculator?
Choose the compounding frequency from the Daily, Weekly, Monthly, Quarterly and other options in the Simple Interest Calculator. Simple Interest Calculator wants to know how often your loans are compounded. The term quarterly compounding refers to calculating and paying interest every three months.
- Is Simple Interest Calculator easy to use?
Easy to use, the Simple Interest Calculator lets you calculate interest you earn on your deposit by entering the compounding frequency, principal amounts, interest rates, and periods.
- What is the benefit of using Simple Interest Calculator when choosing an investment?
Using the Simple Interest Calculator, you will be able to estimate how much compound interest you will earn on investments depending on your investment goals and risk tolerance.