1. What is Simple Interest?

Simple interest is a quick method of calculating the interest charge on a loan or savings based on the original principal amount. It's commonly used for short-term loans and savings in the Philippines.

2. How Does the Calculator Work?

The calculator uses the simple interest formula:

Where:

• \( P \) — Principal amount in PHP
• \( r \) — Annual interest rate in decimal form
• \( t \) — Time period in years

Explanation: The formula calculates interest by multiplying the principal amount by the interest rate and the time period.

3. Importance of Interest Calculation

Details: Understanding interest calculations helps Filipinos make informed decisions about savings and loans, maximizing earnings or minimizing costs.

4. Using the Calculator

Tips: Enter principal amount in PHP, interest rate in decimal form (e.g., 0.05 for 5%), and time period in years. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: How do I convert percentage to decimal?
A: Divide the percentage by 100 (e.g., 5% = 0.05).

Q2: 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.

Q3: What are typical interest rates in PH banks?
A: Savings accounts typically offer 0.1%-1% p.a., while time deposits may offer 1%-4% p.a.

Q4: Can I use this for loan calculations?
A: Yes, if the loan uses simple interest. Most personal loans in PH use this method.

Q5: How accurate is this calculator?
A: It provides exact simple interest calculations, but actual bank calculations may have additional factors.