The formula for simple interest requires your initial principal balance, annual interest rate, and time in years. Say you put a sum of $800 into a savings vehicle with a 5% annual simple interest ...

Example of simple interest. The formula for simple interest requires your initial principal balance, annual interest rate, and time in years.

If you'd like to calculate a total value for principal and interest that will accrue over a particular period of time, use this slightly more involved simple interest formula: A = P(1 + rt).

Multiply the deposit amount by the interest rate by the period of time the deposit earns interest. In the example, $1,000 times 5 percent times 0.5 equals $25. Advertisement ...

Understanding the concept of simple interest by an example Suppose a loan of Rs 20,000 is taken for a period of six years at a rate of 10 percent. By feeding these details, the simple interest ...

To calculate the simple interest for this example, you’d multiply the principal ($5,000) by the annual percentage rate (5 percent) ... The formula for compound interest is: ...