To find the interest rate, you can use different formulas depending on the type of interest:
- For simple interest rate:
r=IP×tr=\frac{I}{P\times t}r=P×tI
where rrr is the interest rate, III is the interest payment, PPP is the principal (original loan or investment amount), and ttt is the time period (usually in years). To express it as a percentage, multiply rrr by 100.
- Another formula to find the simple interest rate when total accrued amount is known:
r=1t(AP−1)r=\frac{1}{t}\left(\frac{A}{P}-1\right)r=t1(PA−1)
where AAA is the total amount after interest, PPP is the principal, and ttt is the time.
- For accrued interest (interest accumulated over time):
r=(IP×t)×365r=\left(\frac{I}{P\times t}\right)\times 365r=(P×tI)×365
where ttt is the number of days the interest has accrued.
- For compound interest rate over a period:
r=(AP)1t−1r=\left(\frac{A}{P}\right)^{\frac{1}{t}}-1r=(PA)t1−1
where AAA is the total amount after compounding, PPP is the principal, and ttt is the time in years.
Steps to Find Simple Interest Rate Example
- Assign values for interest paid, principal, and time.
- Use the formula r=IP×tr=\frac{I}{P\times t}r=P×tI.
- Convert the decimal to a percentage.
Monthly Interest Rate
- Convert annual rate to decimal by dividing by 100.
- Divide by 12 to get monthly rate.
- Multiply monthly rate by principal to find monthly interest amount.
These formulas cover most situations whether you want simple, accrued, or compound interest rates. Choose the formula that fits your scenario best for accurate calculation.
