Simple Interest Calculator Formula

Understand the math behind the simple interest calculator. Each variable explained with a worked example.

Use the Simple Interest Calculator

Formulas Used

Total Interest

interest = principal * annual_rate / 100 * years

Total Value

total_value = principal + principal * annual_rate / 100 * years

Variables

VariableDescriptionDefault
principalPrincipal Amount(USD)10000
annual_rateAnnual Interest Rate(%)5
yearsTime Period(years)3

How It Works

How to Calculate Simple Interest

Simple interest is calculated only on the original principal amount.

Formula

I = P * r * t

Where:

  • I = Interest
  • P = Principal
  • r = Annual rate (as decimal)
  • t = Time in years

    • Worked Example

    You deposit $10,000 at 5% simple interest for 3 years.

    principal = 10000annual_rate = 5years = 3
    1. 01Interest = $10,000 * 0.05 * 3 = $1,500
    2. 02Total value = $10,000 + $1,500 = $11,500

    Ready to run the numbers?

    Open Simple Interest Calculator