A simple interest calculator is a valuable tool for determining the interest accrued on a principal amount over a specified period at a fixed interest rate. Unlike compound interest, where interest is calculated on both the initial principal and accumulated interest, simple interest is computed solely on the original principal. The formula for calculating simple interest is I = P × r × t, where I represents the interest earned, P is the principal amount, r is the annual interest rate (expressed as a decimal), and t is the time in years. For example, if you invest $5,000 at an annual interest rate of 4% for 3 years, the interest earned would be $5,000 × 0.04 × 3 = $600, resulting in a total balance of $5,600. Simple interest calculations are commonly used for short-term loans and investments, providing a straightforward method to assess potential earnings or costs without the complexities of compounding.