1. What is Simple Interest?

Simple interest is a straightforward method of calculating the interest charge on a loan or the return on savings. It is calculated only on the initial principal amount and does not compound over time.

2. How Does the Calculator Work?

The calculator uses the simple interest formula:

Where:

• \( P \) — Principal amount (initial investment)
• \( r \) — Annual interest rate (in decimal form)
• \( t \) — Time period (in years)

Explanation: The formula multiplies the principal amount by the interest rate and the time period to calculate the total interest earned or paid.

3. Importance of Interest Calculation

Details: Understanding interest calculations is crucial for financial planning, comparing investment options, and making informed decisions about loans and savings.

4. Using the Calculator

Tips: Enter the principal amount in your currency, the annual interest rate as a decimal (e.g., 0.05 for 5%), and the time period in years. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What's the difference between simple and compound interest?
A: Simple interest is calculated only on the principal amount, while compound interest is calculated on both the principal and accumulated interest.

Q2: How do I convert percentage to decimal?
A: Divide the percentage by 100. For example, 5% becomes 0.05, 3.25% becomes 0.0325.

Q3: Can I calculate interest for partial years?
A: Yes, enter time as a decimal. For example, 6 months = 0.5 years, 3 months = 0.25 years.

Q4: Is this calculator suitable for loans?
A: Yes, this calculator works for both savings interest and loan interest calculations using the simple interest method.

Q5: What currencies can I use?
A: You can use any currency (USD, EUR, GBP, etc.). The result will be in the same currency unit as your principal input.