1. What is the Interest Formula?

The interest formula calculates monthly interest for financial products in Philippine pesos. It's a fundamental calculation used in banking and personal finance.

2. How Does the Calculator Work?

The calculator uses the simple interest formula:

Where:

• \( I \) — Monthly interest (PHP)
• \( P \) — Principal balance (PHP)
• \( R \) — Monthly interest rate (annual rate divided by 12, as decimal)

Explanation: The formula multiplies the principal amount by the monthly interest rate to determine the interest payment.

3. Importance of Interest Calculation

Details: Accurate interest calculation is crucial for financial planning, loan repayment estimation, and investment return projections.

4. Using the Calculator

Tips: Enter principal balance in PHP and annual interest rate in percentage. All values must be valid (principal > 0, rate between 0-100).

5. Frequently Asked Questions (FAQ)

Q1: Is this simple or compound interest?
A: This calculates simple monthly interest. For compound interest, a different formula would be needed.

Q2: How do I convert annual rate to monthly?
A: Divide the annual rate by 12 (months) and convert from percentage to decimal (divide by 100).

Q3: What's a typical interest rate in the Philippines?
A: Rates vary by product and institution, but personal loans typically range 5-20% annually.

Q4: Does this include service fees?
A: No, this calculates only the interest component. Actual payments may include additional fees.

Q5: Can I use this for savings accounts?
A: Yes, though savings accounts often use daily interest calculations with different compounding methods.