## About Imputed Interest Calculator (Formula)

An imputed interest calculator is a tool used to calculate the interest on a loan or bond that is not paid out in cash but is instead built into the price of the loan or bond. Imputed interest is used to calculate the interest on a zero-coupon bond or below-market loan, which does not pay interest in cash but instead offers a discounted purchase price.

The formula used to calculate the imputed interest is:

**I = P * (r/100) * t**

Where:

I is the imputed interest ($). P is the principal amount ($). r is the annual rate (%). t is the term length (years).

This formula is used to calculate the imputed interest by multiplying the principal amount by the annual rate and the term length. The result is the imputed interest, which is the interest that is built into the price of the loan or bond.

Imputed interest is used in accounting and finance to calculate the interest on a zero-coupon bond or below-market loan, which does not pay interest in cash but instead offers a discounted purchase price.