The formula for simple interest requires your initial principal balance, annual interest rate, and time in years. Say you put ...

The formula for simple interest requires your initial principal balance, annual interest rate, and time in years. Say you put a sum of $800 into a savings vehicle with a 5% annual simple interest ...

If you'd like to calculate a total value for principal and interest that will accrue over a particular period of time, use this slightly more involved simple interest formula: A = P(1 + rt).

Here's how the simple interest formula looks if the initial deposit is $1,000, the annual interest rate is 4% and the number of years is five. 200 = 1,000 x .04 x 5.

Simple interest is based on the principal amount of a loan, ... The quick formula to find the simple interest the student will pay is: $ 3, 240 = $ 18, 000 ...

For example, if you borrow $1,000 from a friend and agree to pay 6% simple interest for two years, the formula above tells you that you'll pay $120 in total interest ($1,000 x 0.06 x 2).

For example, if you take out a five-year loan for $20,000 and the interest rate on the loan is 5 percent, the simple interest formula would be $20,000 x .05 x 5 = $5,000 in interest.

Simple interest works in your favor when you borrow money, while compound interest is better for you as an investor. S&P 500 +---% | Stock Advisor +---% Join The Motley Fool. Accessibility ...