Log in to add a comment

Log in to add a comment

Where:

P is the loan amount

I is the interest rate

N is the duration of the loan, using number of periods

Simple interest is called simple because it ignores the effects of compounding. The interest charge is always based on the original principal, so interest on interest is not included. This method may be used to find the interest charge for short-term loans, where ignoring compounding is less of an issue.