Identify the principal amount
Identify the interest rate
Identify the time period
Determine whether the rate is annual, monthly, or daily
Use simple interest formula: Interest = Principal × Rate × Time
Convert the rate to a decimal before calculating
Convert the time to the same unit as the rate
Use compound interest formula: Amount = Principal × (1 + Rate / Number of compounding periods)^(Number of periods × Time)
Subtract the principal from the total amount to get interest earned
Check whether the interest is fixed or variable
Verify whether the rate is nominal or effective
Use a calculator or spreadsheet for accuracy
Round the result according to the required currency or format