Interest Rate Calculator
Compute simple interest using the formula I = (P × R × T) / 100 and see how your savings or investments grow over time.
Understanding Simple Interest
Simple interest is calculated solely on the principal amount and is commonly used for short-term loans and basic savings accounts.
Formula for Simple Interest
The formula is::
I = (P × R × T) / 100
Where:
- I: Interest
- P:Principal (initial investment or loan amount)
- R: Annual interest rate (percentage)
- T: Time Period (years)
Applications of Simple Interest
- Calculating returns on savings accounts
- Determining interest on short-term loans
- Estimating earnings on fixed deposits
- Understanding basic investment growth
Limitations of Simple Interest
While easy to calculate, simple interest does not account for compound interest, which many financial products use. For long-term investments or loans, compound interest calculations might be more suitable.