Calculator guide
Find interest and final balance when interest is calculated only on the original principal, not on previously earned interest.
Formula or method
Interest earned = principal × (annual interest rate ÷ 100) × time in years. Final balance = principal + interest earned.
How to use this calculator
- Enter the original principal in dollars.
- Enter an annual interest rate as a percentage and the time in years.
- Compare the Interest Earned and Final Balance outputs; use compound interest instead if earned interest is added back to the principal.
Worked example
For $10,000 at 5% per year for 3 years, interest is $10,000 × 0.05 × 3 = $1,500, and the final balance is $11,500.
Understanding the result
Interest grows by the same dollar amount each year in this model: $500 per year in the example. The final balance includes the original $10,000.
Limitations and assumptions
- Assumes a constant annual rate with no compounding, deposits, withdrawals, fees, or taxes.
- The calculator labels the increment Interest Earned; borrowing costs and actual loan payment schedules may follow different rules.
Frequently asked questions
Does this compound monthly?
No. Interest is calculated on the original principal for the entire period.
Can I enter part of a year?
Yes, enter a decimal number of years; for example, 0.5 represents half a year in this model.
Is the final balance all interest?
No. It is the principal plus the calculated interest.
Sources
Educational calculation only; confirm the terms of any real financial product.