Calculate simple interest and total amount using the I = P × r × t formula. Supports years, months, and days.
Enter your details and click Calculate to see results.
Saved Presets is a Supporter feature.
Tool History is a Supporter feature.
Tool Notes is a Supporter feature.
Input the initial amount of money (the principal).
Enter the annual interest rate as a percentage.
Enter the duration and choose years, months, or days.
See the interest earned and the total amount at the end of the period.
Simple interest is calculated using I = P × r × t, where I is the interest amount, P is the principal (original amount), r is the annual interest rate as a decimal (divide percentage by 100), and t is the time in years. For a $10,000 loan at 8% for 3 years: I = $10,000 × 0.08 × 3 = $2,400. The total amount due is A = P + I = $12,400.
Since the formula uses years, other time periods must be converted. For months, divide by 12 (so 18 months = 1.5 years). For days, divide by 365 (so 90 days = 0.2466 years). A $5,000 loan at 10% for 6 months (0.5 years) generates $250 in interest: I = $5,000 × 0.10 × 0.5 = $250.
The formula can be rearranged to solve for any unknown. To find principal: P = I ÷ (r × t). To find rate: r = I ÷ (P × t). To find time: t = I ÷ (P × r). If you paid $600 interest on a $4,000 loan over 2 years, the rate was: r = $600 ÷ ($4,000 × 2) = 0.075 = 7.5%.
Simple interest charges interest only on the original principal, while compound interest charges interest on principal plus accumulated interest. For borrowers, simple interest is better: a $10,000 loan at 8% for 5 years costs $4,000 in simple interest but $4,693 with annual compound interest. That's $693 more with compounding.
Auto loans typically use simple interest, making early payments more beneficial. Personal installment loans often use simple interest, making them preferable to credit cards. Federal and most private student loans charge simple interest. Treasury bills and some bonds also pay simple interest. Credit cards and mortgages generally use compound interest.
Scenario: Borrowing $15,000 at 10% simple interest for 36 months for a kitchen renovation. Inputs: P = $15,000, r = 10%, t = 3 years Calculation: I = $15,000 × 0.10 × 3 = $4,500 Result: Total repayment = $19,500, Monthly payment = $541.67 Application: The fixed interest amount makes budgeting predictable: you know exactly what you'll pay.
Scenario: A small business borrows $50,000 at 8% for 6 months to cover inventory costs. Inputs: P = $50,000, r = 8%, t = 0.5 years Calculation: I = $50,000 × 0.08 × 0.5 = $2,000 Result: Total repayment = $52,000 Application: Short-term simple interest loans are cost-effective for temporary cash flow needs.
Scenario: An investor wants to earn $5,000 interest on $25,000 over 4 years. What rate is needed? Inputs: I = $5,000, P = $25,000, t = 4 years, solve for r Calculation: r = $5,000 ÷ ($25,000 × 4) = 0.05 = 5% Result: Need a 5% annual simple interest rate Application: Helps set investment goals and evaluate whether a rate is achievable.
The simple interest formula is I = P × r × t, where I is interest, P is principal (original amount), r is the annual interest rate as a decimal, and t is time in years. For $10,000 at 5% for 3 years: I = $10,000 × 0.05 × 3 = $1,500.
