Simple Interest Formula — Worked Examples
Published July 20, 2026By Samson PG
Simple interest grows linearly on the original principal. Here is the formula, examples, and when compound interest is the better model.
Simple interest is charged only on the original principal, so it grows in a straight line with time. The common school and short-loan formula is:
SI = P × R × T ÷ 100
Amount = P + SI| Symbol | Meaning |
|---|---|
| P | Principal |
| R | Annual rate (%) |
| T | Time in years |
| SI | Interest earned or owed |
Illustrative math only — not a loan offer or financial advice. Real products may use different day-count rules.
Worked examples
- ₹10,000 at 5% for 3 years:
10,000 × 5 × 3 ÷ 100 = ₹1,500interest → amount ₹11,500 - $2,000 at 8% for 18 months: use T = 1.5 →
2,000 × 8 × 1.5 ÷ 100 = $240 - Six months: enter T = 0.5
Simple vs compound
| Simple | Compound | |
|---|---|---|
| Charged on | Original principal only | Principal + accumulated interest |
| Growth | Linear | Faster over long horizons |
| Typical use | Short loans, textbook problems | Savings, investments, many long loans |
To compare growth paths, use the compound interest calculator. For one-time investment illustrations, see the lumpsum calculator.
Use TryCalculatingNow Simple Interest Calculator
TryCalculatingNow Simple Interest Calculator enters P, R, and T and returns interest plus total amount in your browser. Numbers are not uploaded to our servers for processing.
FAQ
Can I use months instead of years?
Yes — convert to years as a decimal (6 months = 0.5, 18 months = 1.5).
Why doesn’t my bank match the formula?
Day-count conventions, fees, and compounding schedules differ. The textbook SI formula is a clean baseline, not every product’s rulebook.
Is EMI the same as simple interest?
No. EMI amortizes principal and interest over installments — use the EMI / loan calculator.
Is my data uploaded?
No. Calculation stays in your browser.