Interest Calculator: Interest is the compensation paid by the borrower to the lender for the use of money as a percent, or an amount. Usually, Interest is Calculated on the Principle Amount. There are two different methods of accumulating Interest i.e. is Simple Interest, Compound Interest.
To help you out we have given an Online Tool to determine the interest payments and final balances on fixed principle amounts. Make use of the Interest Calculator to compute the total amount of funds after maturity. Continue reading the article to know in detail about the procedure on how to use Interest Calculator, Formula, Solved Examples.
What is Simple Interest?
Simple Interest is a quick and easy method of calculating the interest charged on a loan. You can obtain the Simple Interest by multiplying the Principle, Interest Rate and days elapse between payments.
Formula to determine Simple Interest
Formula to determine the simple interest is given below and the overall gain accumulated via the investment is as
SI = PTR/100
or
SI = PTr
R=Rate of Interest(In decimals)
r=Rate of Interest(In percent)
| SI | Total Simple Interest Payable |
| r | Interest Rate is the Percentage at which Interest accrued over time |
| T | Time is the length of the period in years |
| P | Principle is the sum of money on which Interest is earned |
If you are having any doubts about Formula explained you can look out some examples on Interest and understand how the principle, rate of interest, and time period are used in this SI Formula.
Example 1
Calculate the yearly simple interest payable for the principle sum 10000 Rs. borrowed at 6% of the interest rate for the time period of 1 year.
Solution:
Simple Interest Payable can be calculated using the formula SI = PTr
Given Principle = 10000
Time Period = 1 Year
Rate of Interest = 6%
Substitute all the values given in the basic interest formula i.e. SI = PTr
= 10000(1)(6)/100
= 600
Interest for the borrowed principle 10,000 at the rate of 6% for 1 Year is 600.
Example 2
Calculate the simple interest amount of the principle amount of Rs. 5,000, annual interest rate of 6%, and time of 18 months.
Solution:
Simple interest(I) = P x T x R/100
Given Principle = 5,000
Time T = 18 months
to convert into years divide it by 12 i.e. T = 18/12 = 1.5 Yrs
Rate of Interest = 6%
R=6, r=6/100 =0.06
Substitute all of them in the formula i.e. I = PTr
= 5000(1.5)(0.06)
= 450
Therefore,The simple interest accumulated on a principal of 5000 at a rate of 0.06 % per year for 1.5 years is 450.
How to use Interest Calculator?
If you are having trouble with using Interest Calculator you can use the simple and easy procedure listed below. Follow the instructions carefully to understand how to use Interest Calculator. They are along the lines
- The first and foremost step is to provide the input values of Principle, Time, Rate of Interest.
- You can choose from the input time whether it is year or month.
- Choose the Rate of Interest either in decimals or Percent.
- After choosing the input values you can click on the Submit Button.
- Thereafter, you will get the concerned output i.e. Interest Value in a fraction of seconds along with a step by step explanation.
FAQs on Interest Calculator
1. How to determine the Simple Interest easily?
You can determine the Simple Interest easily by making use of the Interest Calculator. All you need to do is enter the input values like Principle, Rate of Interest, Time, and click on the Submit Button to get interest.
2. What is the formula to calculate Simple Interest?
Formula to Calculate Simple Interest is given by SI = PTR/100 or PTr
3. Do interest rates on principle amount changes over time in SI?
No, unlike compound interest on principle amount stays stagnant.
4. What can I determine using Interest Calculator?
You can use Interest Calculator to know the Interest for a Principle Amount when given the other inputs like Time Period, Rate of Interest, etc.