Determine the principal. For example, if you borrow $500, your principal is $500.
Multiply the principal by the percentage of interest you are going to pay to figure out the annual interest. For example, if you are going to pay 10 percent simple interest, multiply $500 by 0.10 to get $50. Add that $50 to the original $500. You will owe $550 at the end of the year.
Multiply the principal by the interest rate and then multiply the result by the number of years it will take for you to pay off the loan. For example, you take out a $500 loan for two years at 10 percent simple interest. You multiply $500 by 0.10 and then take the answer ($50) and multiply it by 2, since the loan period is two years. You would pay $100 in simple interest for a $500 loan over two years, so in the end you would owe $600.
Determine the principal. For example, if you borrow $500, your principal is $500.
Replace the following formula with the correct figures for your particular loan: FV = PV --- (1+r)^n. FV stands for "future value" of the loan, which is what you will owe at the end of the loan period, including interest. PV stands for "present value" of the loan, which in this case would be $500. The "r" stands for the annual interest percentage, which in this case is 0.10, and the "n" stands for the number of years that you will take to pay the loan back.
Here is the formula for a $500 loan at 10 percent compound interest for five years: FV = 500 x (1+.10)^5.
Simplify the problem. The first step gives you FV = 500 x (1.10)^5. Simplifying it more, you figure out that 1.10 to the fifth power is 1.61051.
So the final answer, or FV (future value), is 500 x 1.61051, or 805.255. If you round that answer to the nearest hundredth, you will owe $805.26 at the end of five years.