Most importantly, people borrow and lend money to start a business or buy something. When we borrow money, it has to be paid back to the possessor along with a fee. Therefore we call the additional amount as interest. Also, you can easily calculate the rate by this Simple Interest Calculator.
The financial realm has its own regulations. Businessmen don’t have money in abundance at the time. Have you heard of any calculator like this? Yes, there is an interest rate calculator that calculates both interest rates in the blink of an eye. There are two kinds of interests namely, simple and compound interest. Simple interest is a sort of interest that is to be returned back. It does not include any past interest or any other financial factors. It is applicable to short-term loans. Generally, companies are offering one year or less for this type of interest.
How Does Interest Calculator Works?
The rate of interest is denoted in terms of percentage. It plays a significant role in knowing the amount of interest and investment. Now, it can complicate you as to how to calculate the simple interest. There is an interest rate calculator that will give you accurate results. Even more, no need to waste your mind and paper in calculations! Also, you have this application of interest calculator on your smartphone.
The basic formula to calculate simple interest is:
Where “m” stands for the number of periods per year and “n” means the number of periods.
Let’s take up a few examples to make a better understanding of the simple interest rate.
Example 1:
Find the simple interest of $6,000 at 10% per annum rate for a time period of 9 months.
Solution:
Since, Simple interest amount = principal amount x (rate / m) x n
Here,
P = 6,000
R = 10%/100 = 0.1
T = 9 months
S.I. = $6,000 x (0.1/12) x 9 = 450
Amount = Principal amount + Interest
= 6000 + 450
= $6,450
As a result, $6,405 is the final amount to pay.
Example 2:
A man borrowed a loan from a company at the rate of 12 % p.a. simple interest. After three years, he had to pay $5400 interest only. What was the principal amount?
The Solution is:
We can solve this by Simple interest formula:
Principal Amount = 100 x 5,400/(12 x 3) = $15,000
Thus, we get the principal amount = $15,000
Uses of Simple Interest Calculator
- Simple interest is very useful in real life. Also, it is the cost of using or borrowing money. In addition, car loans and other consumer stores provide monthly or yearly loans in the form of installments. Also, when you invest money in CD (certificate of deposits) where you cannot withdraw money till a certain time period comes. So, it’s practical applicability in the business and market is more.
- This interest calculator saves time and human effort. Even more, it is an advanced software where you can expertly get the answers in seconds.
- There are no chances of errors in interest calculator. Whether you are a borrower or lender, it’s comparatively manageable to get the results based on the principal amount and time period.
Advantages
- The simple interest formula becomes very sophisticated. You could be tangled in the values if you have a huge amount of money in categories. The values might complicate the solution. Hence, a wrong decision which could hamper your business. So, this interest rate calculator solves your problems in seconds.
- Don’t wait for paper and pen! Go through this application and get your answers. Even more, it is a pre-designed application that gives the correct answers to the interest rate. A machine does not make mistakes, but you can. So, give this interest rate calculator a try!
How to use the Interest Rate Calculator?
This interest calculator is as simple as playing number games. Just open the browser on your computer and open the Interest Calculator. You will notice some empty boxes. You are directed to enter the values according to the instructions in this interest calculator. Firstly, select your currency from the options provided.
Initially, enter the principal amount. Then, enter the annual interest rate and time period. Make sure that you have filled the right digits. Click on the calculate button. You will get the interest amount as well as the total amount. The total amount is the sum of interest amount and principal amount. You will get the answers. To calculate a new problem, click the “Reset” button and go on with the same procedure. This interest calculator is a simplified and organized way to assemble the statements of your startup.
