The protocol

💸

APY Calculation

A = P(1 + rt)

Where:

- A = Total Accrued Amount (principal + interest)
- P = Principal Amount
- I = Interest Amount
- r = Rate of Interest per year in decimal; r = R/100
- R = Rate of Interest per year as a percent; R = r * 100
- t = Time Period involved in months or years

From the base formula, *A = P(1 + rt)* derivated from *A = P + I* and since *I = Prt* then *A = P + I* becomes *A = P + Prt* which can be rewritten as *A = P(1 + rt)*.

Note that rate r and time t should be expressed in the same time unit, such as months or years. Time conversions that are based on day count of 365 days/year have 30.4167 days/month and 91.2501 days/quarter. 360 days/year have 30 days/month and 90 days/quarter.

A = the Final Investment Value, using the simple interest formula: *A = P(1 + rt)* where P is the Principal amount of money to be invested at an Interest Rate R% per period for t Number of Time Periods. Where r is in decimal form, *r=R/100*, r and t are in the same units of time.

The accrued amount of an investment is the original principal P plus the accumulated simple interest, *I = Prt*, therefore we have:

- Calculate Total Amount Accrued (Principal + Interest), solving A
- A = P(1 + rt)

- Calculate Principal Amount, solving P
- P = A / (1 + rt)

- Calculate rate of interest in decimal, solving r
- r = (1/t)(A/P - 1)

- Calculate rate of interest in percent, solving R
- R = r * 100

- Calculate time, solving t
- t = (1/r)(A/P - 1)

Last modified 2mo ago

Export as PDF

Copy link

On this page

Simple Interest Equation (Principal + Interest)

Simple Interest Formulas and Calculations:

Example: