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Simple Interest Formula Excel Examples

1) The document provides examples of calculating simple interest using the formula: Simple Interest = Principal * Rate * Time. 2) It shows calculations for simple interest on loans with various principal amounts, interest rates, and time periods. 3) The amortization method for calculating simple interest on a home loan paid back in monthly installments is also demonstrated.

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Umamaheswara Reddy
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244 views7 pages

Simple Interest Formula Excel Examples

1) The document provides examples of calculating simple interest using the formula: Simple Interest = Principal * Rate * Time. 2) It shows calculations for simple interest on loans with various principal amounts, interest rates, and time periods. 3) The amortization method for calculating simple interest on a home loan paid back in monthly installments is also demonstrated.

Uploaded by

Umamaheswara Reddy
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as XLSX, PDF, TXT or read online on Scribd
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Simple Interest Formula Excel Examples

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Steve lends $10,000 from a bank at an interest rate of 5% per annum for 5 years.
Calculate the simple interest and the outstanding amount due after 5 years.
Particulars Amount
Principal Amount $50,000
Rate 18.00%
Time (in years) 1.48
Simple Interest Formula 13320
Simple Interest $2500
Simple Interest Formula is,
Simple Interest = Principal * Rate * Time
Bigsun Pvt. Ltd. had borrowed an amount of $5,000 from the bank to buy
some assets from the bank at a rate of interest of 5%. Calculate the simple
interest supposing the amount is borrowed for a tenure of 1 year? Likewise,
calculate the simple interest assuming the amount is borrowed for 3 year, 4
year, and 5 year respectively?

Particulars Amount
Principal Amount $5,000
Rate 5.00%
Time (in years) 1
Simple Interest Formula 250
Simple Interest $250
Simple Interest Formula is,
Simple Interest = Principal * Rate * Time

3rd Year 4th Year


Simple Interest Formula (B5*B6*3)/100 (B5*B6*4)/100
Simple Interest 750 1,000

3rd Year 4th Year


Final Amount Formula B15+ B5 C15+ B5
Final Amount 5,750 6,000
5th Year
(B5*B6*5)/100
1,250

5th Year
D15+ B5
6,250
Sam applied for a home loan of $20,000 from a central bank in
New York, with an interest of 6% for 12 months. The loan needs to
be repaid in monthly installments. Thus, calculate the simple
interest following the amortization method.

#1: Let's calculate the monthly payment using Excel PMT function.

Particulars Amount
Principal Amount $20,000
Rate 6.00%
Time (in months) 12
Monthly Payment -$1,721.33
Monthly Payment -$1,721.33

#2: Lets create an amortization table,


Month Payment Amount Remaining Loan Balance Interest Rate Interest Paid
1 $1,721.33 $20,000.00 6.00% $1,200.00
2 $1,721.33 $18,278.67 6.00% $1,096.72
3 $1,721.33 $16,557.34 6.00% $993.44
4 $1,721.33 $14,836.01 6.00% $890.16
5 $1,721.33 $13,114.68 6.00% $786.88
6 $1,721.33 $11,393.35 6.00% $683.60
7 $1,721.33 $9,672.02 6.00% $580.32
8 $1,721.33 $7,950.69 6.00% $477.04
9 $1,721.33 $6,229.36 6.00% $373.76
10 $1,721.33 $4,508.03 6.00% $270.48
11 $1,721.33 $2,786.70 6.00% $167.20
12 $1,129.29 $1,065.37 6.00% $63.92
Formulas to calculate are,
Loan Balance = Previous Loan Balance - Payment Amount
Interest Paid = Loan balance * Interest Rate
Principal Paid = Payment Amount - Interest Paid
Principal Paid
$521.33
$624.61
$727.89
$831.17
$934.45
$1,037.73
$1,141.01
$1,244.29
$1,347.57
$1,450.85
$1,554.13
$1,065.37
Maryland Industries Ltd. has taken a Long-term borrowing of $15,000 with an
interest rate of 10% per annum from a corporate bank. Calculate the simple interest
paid by Maryland Industries Ltd after 2 years and also find out the total amount
(Simple Interest) paid by the company at the end of tenure.

Particulars Amount
Principal Amount $15,000
Rate 10.00%
Time (in years) 2
Simple Interest Formula 18000
Simple Interest 18,000
Simple Interest Formula is,
Amount = Principal * (1 + rate * time)

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