1. What is Accrued Interest?

Accrued interest is the amount of interest that has accumulated on a loan or investment but has not yet been paid or received. It's calculated using the simple interest formula based on the principal amount, interest rate, and time period.

2. How Does the Calculator Work?

The calculator uses the simple interest formula:

Where:

• \( Principal \) — Original loan or investment amount ($)
• \( Rate \) — Annual interest rate (in decimal form)
• \( Time \) — Time period in years

Explanation: The formula calculates how much interest accumulates over time without compounding.

3. Importance of Interest Calculation

Details: Accurate interest calculation is crucial for financial planning, loan repayment schedules, and investment return projections.

4. Using the Calculator

Tips: Enter principal in dollars, rate as a decimal (e.g., 5% = 0.05), and time in years. 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, while compound interest is calculated on principal plus accumulated interest.

Q2: How do I convert APR to decimal?
A: Divide the percentage by 100 (e.g., 7.5% becomes 0.075).

Q3: Can I use this for partial years?
A: Yes, enter fractional years (e.g., 6 months = 0.5 years).

Q4: Does this account for payment frequency?
A: No, this calculates total accrued interest regardless of payment schedule.

Q5: When is simple interest typically used?
A: For short-term loans, some bonds, and certain types of consumer loans.