Interest Calculator

Interest is the cost of borrowing money or the return on invested money. There are two main types of interest calculations:

Simple Interest

Simple interest is calculated only on the original principal amount throughout the loan or investment period.

Simple Interest = (P × R × T) / 100
Where,
P = Principal amount
R = Annual interest rate
T = Time period in years

Compound Interest

Compound interest is calculated on the initial principal and also on the accumulated interest of previous periods.

A = P × (1 + r/n)^(n×t)
Where,
A = Final amount
P = Principal amount
r = Annual interest rate (decimal)
n = Number of compounding periods per year
t = Time period in years

Comparison of Simple vs Compound Interest

Factor	Simple Interest	Compound Interest
Calculation Basis	Only on principal	Principal + accumulated interest
Growth	Linear	Exponential
Returns	Lower	Higher
Common Use	Short-term loans, simple investments	Long-term investments, savings accounts

Key Concepts

• Principal: The initial amount of money invested or borrowed
• Interest Rate: The percentage charged on the principal
• Time Period: The duration for which the money is invested or borrowed
• Compounding Frequency: How often interest is calculated and added to the principal (for compound interest)

Note: This calculator provides estimates only. Actual interest calculations may vary based on specific financial products and terms.