Select currency

Principal Amount

₹

Rate of Interest(p.a)

%

Time Period(years)

year

Principal Amount | Interest | Total Amount |
---|---|---|

₹ 1,00,000 | ₹ 0 | ₹ 1,00,000 |

Simple interest is a method of calculating interest on a loan or investment where the interest is calculated only on the principal amount. This means that the interest is not compounded, and remains constant throughout the loan or investment period. The formula for calculating simple interest is: Interest = (Principal x Rate x Time) / 100

What is the difference between simple interest and compound interest?

Simple interest is calculated only on the principal amount, while compound interest is calculated on both the principal amount and the accumulated interest. This means that compound interest can result in a higher overall interest amount over time.

Can the interest rate be negative for simple interest?

No, the interest rate cannot be negative for simple interest. If the interest rate is negative, the amount owed or invested would decrease over time, which is not possible.

Is simple interest used in practice?

Yes, simple interest is commonly used for short-term loans and investments, such as personal loans, car loans, and short-term bonds.

How does the time period affect the interest amount?

The longer the time period, the higher the interest amount will be. This is because the interest is calculated on the principal amount for each year of the loan or investment period.