Interest Calculator
Calculate Simple & Compound Interest for Business and Education
Simple Interest Calculator
Simple Interest Calculation Results
Compound Interest Calculator
Compound Interest Calculation Results
Understanding Interest Calculations
Simple Interest
Simple interest is calculated only on the principal amount. It does not take into account any interest earned in previous periods.
Formula: I = P × r × t
Where:
I = Interest
P = Principal amount
r = Annual interest rate (as a decimal)
t = Time in years
Compound Interest
Compound interest is calculated on the principal amount and also on the accumulated interest of previous periods. This results in interest earning interest, which can significantly increase returns over time.
Formula: A = P × (1 + r/n)^(n×t)
Where:
A = Total amount after interest
P = Principal amount
r = Annual interest rate (as a decimal)
n = Number of compounding periods per year
t = Time in years
Key Differences
• Simple interest grows linearly, while compound interest grows exponentially.
• For short-term investments, the difference may be minimal.
• For long-term investments, compound interest can generate significantly higher returns.
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