Simple Interest (SI): —
Total Amount (Simple): —
Compound Interest (CI): —
Total Amount (Compound): —
Use the calculator above to understand how simple and compound interest are mathematically calculated. This tool helps students and learners visualize how different parameters (Principal, Rate, Time, and Compounding Frequency) affect the numerical result of interest calculations — only for educational and academic learning purposes.
What is Interest
In mathematics and finance-related subjects, interest is a calculated value representing an increase in an amount over time based on a certain rate and duration.
This concept is studied to understand percentage growth, ratios, and exponential calculations, not for practical or financial gain.
There are two main types of interest studied in mathematics:
- Simple Interest (SI)
- Compound Interest (CI)
Simple Interest (SI)
Simple Interest is calculated only on the original amount (Principal) for a given period of time.
It does not involve interest on previously calculated amounts.
SI = (P × R × T) / 100
here:
- P = Principal amount
- R = Rate of interest (percentage per year)
- T = Time period (in years)
Example:
If the principal amount is PKR 10,000, rate is 5% per year, and time is 2 years:
SI = (10000 × 5 × 2) / 100 = 1,000
Total amount (A) = P + SI = 10,000 + 1,000 = PKR 11,000
Compound Interest (CI)
Compound Interest is calculated on both the principal and the accumulated interest for previous periods.
It helps in understanding the concept of exponential growth in mathematics.
Formula:
CI = A – P and
A = P × (1 + R / (100 × n))ⁿᵀ
here:
- P = Principal amount
- R = Annual rate of interest
- T = Time period (in years)
- n = Number of times interest is compounded per year
Example:
For PKR 10,000 at 5% annual rate, for 2 years, compounded quarterly (n = 4):
A = 10000 × (1 + 0.05/4)⁸ = PKR 11,044.81
CI = 11,040.81 – 10,000 = PKR 1,044.81
So, the calculated compound interest is PKR 1,044.81.
Mathematical Difference Between SI and CI
| Concept | Simple Interest (SI) | Compound Interest (CI) |
|---|---|---|
| Formula | (SI = (P × R × T)/100) | (A = P(1 + R/(100×n)){nT}), (CI = A – P) |
| Growth Pattern | Linear (proportional to time) | Exponential (depends on compounding) |
| Compounding | Not included | Included |
| Example Use | Academic calculation of uniform growth | Academic study of exponential increase |
Conclusion
These formulas are studied purely as part of mathematical learning to understand percentage-based growth, compounding, and time-value calculations.
In practical or religious contexts, especially in Islam, dealing with Riba (interest) is strictly prohibited. Therefore, this content and calculator are meant only for educational, academic, and mathematical purposes, such as in school, college, or competitive exams, not for real-world financial applications.
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