To calculate simple interest, you need three key pieces of information: the principal amount, the interest rate, and the time period. For example, if a business borrows $10,000 at an annual interest rate of 5% for 3 years, the simple interest would be calculated as follows:
SI = $10,000 × 0.05 × 3 = $1,500
Therefore, the business would owe $1,500 in interest over the 3-year period.