Summary

To calculate simple interest in Excel (i.e. interest that is not compounded), you can use a formula that multiples principal, rate, and term.

This example assumes that $1000 is invested for 10 years at an annual interest rate of 5%. Simple interest means that interest payments are not compounded – the interest is applied to the principal only.

In the example shown, the formula in C8 is:

=C5*C7*C6

Generic formula

interest=principal*rate*term

Explanation 

The general formula for simple interest is:

interest=principal*rate*term

So, using cell references, we have:

=C5*C7*C6
=1000*10*0.05
=500

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Dave Bruns

Hi - I'm Dave Bruns, and I run Exceljet with my wife, Lisa. Our goal is to help you work faster in Excel. We create short videos, and clear examples of formulas, functions, pivot tables, conditional formatting, and charts.

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