How to calculate simple interest in Excel
Formula (Excel and Google Sheets)
=B2*B3*B4Multiply principal by rate by time in years: =B2*B3*B4.
- Result on the example
- $1,320.00 in
B5 - Works in
- Every current version
- Google Sheets
- Same formula
See it work
The formula is already in B5. Change any input and the result updates, or edit the formula to experiment.
How it works
Simple interest is charged only on the original principal, so it is the same every year: 5.5% of $8,000 is $440 a year, and three years make $1,320. Compound interest, by contrast, also charges interest on earlier interest.
=B2*B3*B4Result1320
B2$8,000The value in B2.
B35.5%The value in B3.
B2*B3440The * operator multiplies.
B43The value in B4.
B2*B3*B41320The * operator multiplies.
In Google Sheets
The same formula works in Google Sheets: =B2*B3*B4. We ran it in Google Sheets mode on the same data and it returns $1,320.00.
Other ways to do it
Each one was run on the same example sheet.
| Formula | Result | When to use it |
|---|---|---|
| =B2*(1+B3*B4) | $9,320.00Different result | The total to repay: principal plus interest. Total amount: $9,320.00. |
| =B2*(1+B3)^B4-B2 | $1,393.93Different result | Compound interest on the same terms, for comparison. Compound interest is higher: $1,393.93. |
Common mistakes
- Time must be in years when the rate is annual. For 9 months use 0.75, or
9/12. - Enter the rate as a percentage (5.5%) or decimal (0.055), not 5.5.
Try it yourself
Same data, empty answer cell. Your formula is graded instantly, then re-checked on changed data, so a typed-in number won't pass.
Calculate simple interest
B5, calculate the simple interest on the principal in B2 at the annual rate in B3 for the number of years in B4.Questions
How do I calculate simple interest between two dates?
Use the days divided by 365: =B2*B3*(C2-C1)/365, with the dates in C1 and C2.
When is simple interest used?
Short-term loans, some car loans, bonds' accrued interest and many personal loans between people.
Checked by running on 2026-10-30: every formula and result on this page was calculated by the Spreadsheet Practice formula engine, in both Excel and Google Sheets modes.