Simple Interest Calculator
Enter the principal, annual rate and term in years to get the interest and the total, for an investment or a loan.
Enter the principal, annual rate and term in years to get the interest and the total, for an investment or a loan.
Every formula used by these calculators. They match the FNSACC323 Perform financial calculations unit.
Markup calculates profit as a percentage of the cost price. Profit Margin calculates profit as a percentage of the selling price.
Fixed Costs stay the same no matter how much you sell (e.g. rent, insurance). Variable Cost is what it costs to make or deliver one single unit (materials, packaging, per-item shipping) — it goes up and down with sales, unlike fixed costs. Selling Price is what you charge per unit.
P is the principal (the amount invested or borrowed), R is the annual interest rate as a decimal, and T is the time in years. The total at the end is the principal plus the interest.
Example. $5,000 is invested at 4% simple interest for 3 years.
I = $5,000 × 0.04 × 3 = $600. Total value = $5,600.
Express the time as a fraction of a year. Six months is 0.5, 90 days is 90 ÷ 365. So $5,000 at 4% for 90 days earns $5,000 × 0.04 × (90 ÷ 365) = $49.32.
Simple interest is only ever charged on the original principal, so it grows in a straight line. Compound interest is charged on the principal plus interest already earned, so it grows faster over time. For savings accounts and most loans, use the compound interest calculator. The two are compared in Simple vs compound interest explained.
I = P × R × T, where P is the principal, R is the annual rate as a decimal and T is the time in years.
Divide the number of months by 12 and use that as T. Eight months is 8 ÷ 12 = 0.667 years.
Short-term loans, some term deposits that pay interest at maturity, and interest on overdue invoices are commonly calculated as simple interest.