Interest calculations determine how much money is earned or paid over time based on a principal amount. There are two main types of interest: simple interest and compound interest. Simple interest is calculated only on the principal amount, while compound interest is calculated on the principal and any accumulated interest. To calculate simple interest, use the formula: Interest = Principal × Rate × Time. For compound interest, the formula is: A = P(1 + r/n)^(nt), where A is the total amount, P is the principal, r is the annual interest rate, n is the number of times interest is compounded per year, and t is the number of years.