Simple Interest
Calculates interest without compounding.
I = Prt
Variables
- I
- interest
- P
- principal
- r
- annual rate as decimal
- t
- time in years
Example
$1,000 at 5% for 3 years → $150
How to use this formula
Identify the known values, keep units consistent, substitute the values into the formula, and calculate carefully. Then check whether the result is reasonable for the original problem.