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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.
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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

  1. We have defined three variables that will be used to calculate the simple interest in Python - principal_amounttime, and rate_of_interest.
  2. 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.
  3. 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

Full Code Example

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