Simple Interest Calculator
Professional-grade financial tool for calculating simple interest with inflation adjustments, reverse goal planning, and compound interest comparison graphs.
| Year | Interest Earned | Cumulative Interest | Balance |
|---|
About
Accuracy in financial planning is the difference between meeting a goal and falling short. This Simple Interest Calculator is engineered for students, investors, and borrowers who require a precise understanding of linear capital growth. Unlike basic tools, this engine accounts for critical real-world variables such as inflation and time-unit normalization.
Simple interest is calculated strictly on the principal amount P, meaning the interest earned does not compound over time. This structure is common in short-term personal loans, automobile financing, and certain bond yields. However, neglecting the corrosive effect of inflation or failing to compare against compound growth can lead to significant valuation errors over long horizons. This tool provides that necessary context.
Formulas
The core mechanic relies on the fundamental linear growth equation. To ensure precision, all time inputs are normalized to annualized values before calculation.
Interest Amount (I):
I = P × r × t100
Total Amount (A):
A = P + I
Real Return (Adjusted for Inflation i):
Areal = A1 + it
Where P is Principal, r is annual rate (%), t is time (years), and i is average annual inflation (decimal).
Reference Data
| Asset Class / Loan Type | Typical Rate (r) | Interest Type | Risk Profile |
|---|---|---|---|
| High-Yield Savings Account | 4.0% - 5.5% | Compound | Low |
| US Treasury Bills (T-Bills) | 4.0% - 5.3% | Simple (Discount) | Risk-Free |
| Corporate Bonds (Investment Grade) | 5.0% - 7.0% | Simple (Coupon) | Moderate |
| Personal Loans | 10% - 35% | Simple (Amortized) | High |
| Credit Card APR | 15% - 29% | Compound (Daily) | N/A (Debt) |
| Auto Loans | 5% - 15% | Simple | Medium |
| Hard Money Loans | 10% - 18% | Simple | High |
| Certificate of Deposit (CD) | 4.5% - 5.5% | Compound | Low |