💰 Financial
Simple Interest Calculator
Calculate the exact amount of simple interest earned or paid on a principal amount. Simple interest is calculated only on the initial amount, not on accumulated interest.
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Formula
I = P × r × tI- Total interest amount
P- Principal starting amount
r- Annual interest rate (as a decimal)
t- Time in years
Example
Loaning Money to a Friend
You lend a friend $2,000 for 3 years at a 4% simple interest rate.
- Identify parameters: P = $2,000, r = 0.04, t = 3 years.
- Apply formula: I = $2,000 × 0.04 × 3.
- Result: The total interest is $240. Your friend will repay you a total of $2,240.
Frequently Asked Questions
No. Because you do not earn "interest on your interest," simple interest grows linearly (a straight line) while compound interest grows exponentially (a curve).