Interest RateEstimated Interest RateYour estimated annual interest rate. Thus if simple interest is charged at 5 on a 10000 loan that is taken out for three years the total amount of interest payable by the borrower is calculated as 10000 x 005 x 3 1500. Divide the percentage by 100 to get the decimal value.
Simple interest is calculated only on the initial amount principal that you invested.
Start with the initial amount borrowed or invested. P Principal amount Initial Investment r Annual interest rate in percentage t Time period in years When calculating simple interest by days use the number of days for t and divide the interest rate by 365. This may seem low to you if youve read that the stock market averages much higher returns over the course of decades. Multiplying the annual percentage rate by.