A simple interest loan calculates the interest based only on the principal you owe. It stands in contrast to a compound interest loan, which calculates interest based on principal and any ...

For example, if you borrow $1,000 from a friend and agree to pay 6% simple interest for two years, the formula above tells you that you'll pay $120 in total interest ($1,000 x 0.06 x 2).

Multiply the deposit amount by the interest rate by the period of time the deposit earns interest. In the example, $1,000 times 5 percent times 0.5 equals $25. Advertisement ...

For comparison, with compounded interest, you'd end up with $11,025, since you would get interest on the first year's interest as well. Press "2nd" and "Finance" to bring up the TI-83's finance menu.

However, most lenders use the simple interest method. Simple interest calculator. To calculate simple interest on a loan, multiply the principal (P) by the interest rate (R) by the loan term in ...