Simple Interest Calculator

Short-term financing agreements, promissory notes, peer loans, and basic certificates of deposit often rely on linear interest rather than geometric compounding schedules. Under these standard agreements, interest generates purely from the original principal sum, remaining entirely flat and predictable across the entire duration. Correctly evaluating such financial contracts requires identifying the opening principal sum, the stated annual percentage interest rate, and the overall lending duration expressed in years or fractional calendar periods.

The resulting calculation presents both the standalone interest accrued over the horizon and the combined final payoff obligation. Reviewing these figures side by side clarifies the true economic cost of borrowing or the final return yielded on an uncompounded deposit. Keep in mind that simple interest calculations assume that accrued earnings are never reinvested or recapitalized, making this model unsuitable for revolving lines of credit, mortgages, or bank savings accounts that compound interest on a daily or monthly basis.

The calculation applies the standard formula I = P × r × t, where principal P is multiplied by the annual decimal rate r and the duration in years t. The resulting interest I is then added to the original principal to determine the final maturity value A = P + I.