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# How to calculate simple interest

### See also

A simple lesson about simple interest: you simply multiply the principal, the interest rate (written as a DECIMAL), and the time. That is because the interest simply is a certain percentage OF the principal amount (so that's why we multiply the percentage and the interest rate), multiplied by the amount of time. So, the formula for simple interest, I = Prt, makes sense.

One thing to take note of is that sometimes the interest rate may be given as ANNUAL rate, whereas the time period is in months. In this case, you can either calculate the monthly interest rate, or convert the time period into years.

Basic percent word problems — video lesson

Math Mammoth Grade 7 curriculum (pre-algebra)