## How to use this Simple Interest Calculator?

- Enter the value of principal, number of periods and the simple interest rate.
- Press CALCULATE to calculate the value of simple interest and total amount based on the entered principal, number of periods and interest rate.
- Click RESET to reset the entered values and start a new calculation. (You can also start a new calculation without pressing RESET).

## What is Simple Interest (SI)?

Simple interest is calculated on a loan’s principal amount or the first deposit into a savings account. Unlike compound interest, simple interest doesn’t compound, so an account holder only earns interest on the principal and a borrower never has to pay interest on the previously accumulated interest.

So, simple interest (S.I.) is a way of figuring out how much interest will accrue on a specific principal sum of money at a certain rate of interest. For instance, if someone borrows $1000 at a rate of 10 p.a. for two years, the person will pay S.I. on the borrowed money for those two years.

## Simple Interest Calculation Formula

The formula for calculating simple interest is S.I. = P * T * R, where P stands for principal, R for the annual percentage rate of simple interest, and T for time, which is typically expressed as the number of years. The interest rate is expressed as r/100 and is expressed as a percentage of r percent.

So, Simple Interest (SI) = P * T * R

If ‘A’ represents the amount of total payment at the end of the total period, then

A = P + PTR = P (1 + TR)

Where, A = final amount, P = initial principal balance, R = annual simple interest rate, T = time (in years).

You can use the simple interest calculator above to understand how the relationship between the principal, interest rate, time period and interest varies.