Simple Interest

I = P \, r \, t

Worked example: $1000 at 5% for 3 periods → I = 150 — press Try an example to run it live, then adjust anything.

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Simple interest →

Grade 11Grade 11 Math — Functions & Applications

Percent change and simple interest →

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Simple Interest explained

Simple interest pays only on the original principal, never on past interest: a $2,000 loan at 6% per year for 3 years costs I = 2000 × 0.06 × 3 = $360, exactly $120 each year. Enter the rate as a decimal (6% → 0.06) and keep the rate and the time in the same period — a monthly rate with months, a yearly rate with years.

Short-term personal loans, car loans, and bonds' coupon payments often work this way. Compare with compound interest, where each period's interest joins the principal and the total pulls ahead of the simple-interest straight line.

Simple Interest formula

I = P \, r \, t

Where

$I$ = Interest earned
$P$ = Principal
$r$ = Interest rate per period (decimal)
$t$ = Number of periods

Missing one of these? Work it out first, then come back

Principal — Compound Interest (Periodic), Continuous Compounding
Interest rate per period (decimal) — Compound Interest (Periodic), Continuous Compounding
Number of periods — Exponential Growth, Exponential Decay

Part of this formula set

Time value of money

4 formulasSimple interest, periodic and continuous compounding, and discounting a future amount back to what it is worth today.