Enter the principal amount and the annual statutory interest rate and time into the calculator to determine the statutory interest.
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Statutory Interest Formula
The following formula is used to calculate the statutory interest.
SI = P * r * t
Variables:
- SI is the statutory interest ($)
- P is the principal amount ($)
- r is the annual statutory interest rate (decimal)
- t is the time the money is borrowed or invested for (years)
To calculate the statutory interest, multiply the principal amount by the annual statutory interest rate, then multiply the result by the time the money is borrowed or invested for.
What is a Statutory Interest?
Statutory interest is a rate of interest that is legally payable on a debt. It is set by law and applied to overdue payments to compensate the creditor for the delay in payment. The rate can vary depending on the jurisdiction and the type of debt, but it is typically calculated as a percentage of the amount owed. It is often used in legal proceedings and business transactions to encourage timely payment and discourage the accrual of debt.
How to Calculate Statutory Interest?
The following steps outline how to calculate the Statutory Interest (SI).
- First, determine the principal amount ($).
- Next, determine the annual statutory interest rate (decimal).
- Next, determine the time the money is borrowed or invested for (years).
- Next, gather the formula from above = SI = P * r * t.
- Finally, calculate the Statutory Interest.
- After inserting the variables and calculating the result, check your answer with the calculator above.
Example Problem :
Use the following variables as an example problem to test your knowledge.
principal amount ($) = 5000
annual statutory interest rate (decimal) = 0.05
time the money is borrowed or invested for (years) = 3
