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Financial
Simple Interest Calculator
Compute interest earned and total repayment or balance using the simple interest formula.
How the Simple Interest Calculator Works
This simple interest calculator computes the interest earned or paid on a loan or deposit where interest is calculated solely on the original principal amount. There is no compounding in this calculation.
Formula Used
I = P × r × t
- I
- — Interest amount earned or paid
- P
- — Principal (original amount borrowed or invested)
- r
- — annual interest rate (expressed as a decimal, e.g. 4% = 0.04)
- t
- — time period the money is borrowed or invested, in years
Example Calculation
If you invest $5,000 at an annual simple interest rate of 4% for 3 years: Interest I = 5,000 × 0.04 × 3 = $600. The total value at the end of 3 years is $5,000 + $600 = $5,600.