# Calculate simple and compound interest in Python

If you are working on a finance application or some mathematical solutions then you may have a requirement to calculate the simple or compound interest. In this post, we will explain to calculate them one by one.

Let's check the mathematical formulas of simple and compound interest.

**Simple Interest = (principal * time * rate) / 100**

**Compound Interest = principal((1 + rate / 100)time - 1)**

## Calculate the simple interest

We will calculate the simple interest using Python code here. We will use "*" and "/" arithmetic operators of Python to calculate that. We will be using the above Simple Interest formula for the calculation. Let's check the Python program to understand it.

```
# input values required
principal_amount = 10000
time = 4
rate_of_interest = 14
# calculate the simple interest
simple_interest = (principal_amount * time * rate_of_interest)/100
print("Simple interest is: ", simple_interest)
```

**Output**

`Simple interest is: 5600.0`

**In the above Python code example**

- We have defined three variables that will be used to calculate the simple interest in Python -
**principal_amount**,**time,**and**rate_of_interest**. - Using the code -
**(principal_amount * time * rate_of_interest)/100**, we are calculating the simple interest and assigning the result to the**simple_interest**variable. - Print the result -
**simple_interest**.

## Calculate the compound interest

The **compound interest** can be calculated in Python using two methods. The first is that we use "*", "/" and "**" operators and the second is using "*", "/" and pow() function. We will be using the mathematical formula of Compound Interest to calculate it in Python.

**# Example 1**

```
# input values required
principal_amount = 10000
time = 4
rate_of_interest = 14
# calculate the simple interest
compound_interest = principal_amount * ((1 + rate_of_interest / 100)**time - 1)
print("Compound interest is: ", compound_interest)
```

**Output**

`Compound interest is: 6889.601600000008`

**# Example 2: Using pow() function**

```
# input values required
principal_amount = 8000
time = 4
rate_of_interest = 13.25
# calculate the compound interest
amount = principal_amount * (pow((1 + rate_of_interest / 100), time))
compound_interest = amount - principal_amount
print("Compound interest is: ", compound_interest)
```

**Output**

`Compound interest is: 5159.604275312504`

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