How to calculate / negociate the simple flat interest rate of a principal - initial starting amount of money lent, deposited or borrowed, in order to collect or pay a certain simple flat rate interest by the duration and any additional transaction fees (withdrawal, payment in advance, etc.).
Annual simple flat rate interest formula:
I = S × p% × n
- I = n years simple interest charged
- S = initial amount (principal)
- p% = annual simple flat interest rate (percentage of the principal, charged as interest)
- n = number of years of the lending or borrowing the money
Formula of the simple flat interest rate applied on the principal - initial starting amount of money lent, deposited or borrowed, in order to earn a simple flat annual rate:
p% = I ÷ (S × n)
Examples of how to calculate the simple flat interest rate on the principal amount in order to earn a certain simple flat rate interest:
- 1) What is the simple flat interest rate of the principal S = 20,000 units that has to be lent, deposited or borrowed, for a period of n = 5 years, if the simple flat rate interest collected or paid D = 3,500 units?
Answer:
p% = I ÷ (S × n) = 3,500 ÷ (20,000 × 5) = 3,500 ÷ 100,000 = 3.5 ÷ 100 = 3.5% - 2) What is the simple flat interest rate of a principal S = 5,000 units, that has to be lent, deposited or borrowed, for a period of n = 3 years, if the simple flat rate interest collected or paid D = 300 units?
Answer:
p% = I ÷ (S × n) = 300 ÷ (5,000 × 3) = 300 ÷ 15,000 = 3 ÷ 150 = 1 ÷ 50 = 2 ÷ 100 = 2%
Annual simple flat interest rate formula calculated for a period of n years:
- Simple flat interest rate, p% = I ÷ (S × n)
- Interest, I = S × p% × n
- Principal, S = I ÷ (p% × n)
- Number of years of the period of the deposit, lending or borrowing, n = I ÷ (S × p%)
Formula of the simple flat interest rate of the principal for an annual simple flat rate interest calculated for a period of m months:
- Simple flat interest rate, p% = (12 × I) ÷ (S × m)
- Interest, I = (S × p% × m) ÷ 12
- Principal, S = (12 × I) ÷ (p% × m)
- Number of months of the period, m = (12 × I) ÷ (S × p%)
Formula of the simple flat interest rate of a principal for an annual simple flat rate interest calculated for a period of d days:
- Simple flat interest rate, p% = (365 × I) ÷ (S × d)
- Interest, I = (S × p% × d) ÷ 365
- Principal, S = (365 × I) ÷ (p% × d)
- Number of days of the period, d = (365 × I) ÷ (S × p%)
More examples of how the simple flat interest rate of a principal for a simple flat rate interest formula works:
- 1) Calculate the simple flat interest rate of the initial amount S = 400 units that would generate a simple flat rate interest I = 6.67 units in m = 5 months.
Answer:
p% = (12 × I) ÷ (S × m) = (12 × 6.67) ÷ (400 × 5) = (12 × 6.67) ÷ 2,000 = 80 ÷ 2,000 = 4% - 2) Calculate the simple flat interest rate of the initial amount S = 400 units that would generate a simple flat rate interest I = 7.5 units in m = 5 months.
Answer:
p% = (12 × I) ÷ (S × m) = (12 × 7.5) ÷ (400 × 5) = 90 ÷ 2,000 = 4.5%.