1. What is Simple Interest Calculation?

Simple interest is a method of calculating the interest charge on a loan or investment based on the original principal amount. For fixed deposits, it calculates the return based on the initial deposit, interest rate, and time period.

2. How Does the Calculator Work?

The calculator uses the simple interest formula:

Where:

• \( A \) — Maturity amount (₹ or currency)
• \( P \) — Principal amount (₹ or currency)
• \( r \) — Annual interest rate (decimal)
• \( d \) — Number of days

Explanation: The formula calculates the final amount by adding the interest earned (principal × rate × time) to the original principal.

3. Importance of Interest Calculation

Details: Accurate interest calculation helps investors understand their potential returns, compare different investment options, and make informed financial decisions.

4. Using the Calculator

Tips: Enter the principal amount in your currency, annual interest rate as a percentage, and the number of days for the investment. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What's the difference between simple and compound interest?
A: Simple interest is calculated only on the principal amount, while compound interest is calculated on the principal plus accumulated interest.

Q2: Why divide by 365 in the formula?
A: We divide by 365 to convert the annual rate to a daily rate, assuming a 365-day year. Some institutions may use 360 days.

Q3: Is this calculator suitable for all currencies?
A: Yes, the formula works for any currency as long as you're consistent with your principal amount and interest rate inputs.

Q4: Does this account for taxes on interest income?
A: No, this calculator shows the gross interest amount before any applicable taxes or deductions.

Q5: Can I use this for loan calculations as well?
A: Yes, the same formula applies to simple interest loans, where you'd be calculating the total repayment amount.