Simple Interest Worksheets

How to Calculate Simple Interest - Simple interest is a quick and easy method of calculating the interest charge on a loan. Simple interest is determined by multiplying the daily interest rate by the principal by the number of days that elapse between payments. Understanding simple interest is one of the most important and fundamental concepts for mastering your finances. It involves some simple math, but calculators can do the work for you if you prefer. To calculate simple interest, use this formula: Principal x rate x time = interest. For example, say you invest $100 (the principal) at a 5% annual rate for one year. The simple interest calculation is: $100 x .05 x 1 = $5 simple interest for one year. Note that the interest rate (5%) appears as a decimal (.05). To do your own calculations, you may need to convert percentages to decimals. An easy trick for remembering this is to think of the word percent as "per 100." You can convert a percentage into its decimal form by dividing it by 100. Or, just move the decimal point two spaces to the left. For example, to convert 5% into a decimal, divide 5 by 100 and get .05.