1. What is Interest Revenue?

Interest revenue is the income earned from lending money or capital to another entity. It represents the return on investment for providing funds and is calculated based on the principal amount, interest rate, and time period.

2. How Does the Calculator Work?

The calculator uses the simple interest formula:

Where:

• \( P \) — Principal amount (USD)
• \( r \) — Interest rate (expressed as a decimal)
• \( t \) — Time period (years)

Explanation: This formula calculates the interest earned on a principal amount over a specific time period at a given interest rate.

3. Importance of Interest Revenue Calculation

Details: Calculating interest revenue is essential for financial planning, investment analysis, and understanding the return on investments. It helps individuals and businesses make informed decisions about lending and investing activities.

4. Using the Calculator

Tips: Enter the principal amount in USD, interest rate as a decimal (e.g., 0.05 for 5%), and time period in years. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What's the difference between simple and compound interest?
A: Simple interest is calculated only on the principal amount, while compound interest is calculated on both the principal and accumulated interest.

Q2: How do I convert an annual percentage rate to a decimal?
A: Divide the percentage rate by 100. For example, 5% becomes 0.05.

Q3: Can this calculator be used for partial years?
A: Yes, you can enter fractional years (e.g., 0.5 for 6 months, 0.25 for 3 months).

Q4: Does this formula account for compounding?
A: No, this is the simple interest formula. For compound interest, a different formula is needed.

Q5: Is this formula used for both lending and investing?
A: Yes, the simple interest formula applies to both scenarios where interest is earned on a principal amount.