Understanding Prejudgment Interest
How we calculate. Simple interest = P × r × t (r as decimal annual rate). The form uses the same arithmetic as the worked examples on this page. See our methodology and accuracy policy.
Real-world scenario: A typical Prejudgment Interest case uses principal 50000 and annual rate (%) 6. Enter the same figures below to reproduce the worked path.
What is Prejudgment Interest?
Educational estimate only. Statutes may require specific rates, compounding, or day-count rules—verify jurisdiction law.
- Simple interest form (not compound)
- Confirm statutory rate
- Day-count may differ (365/360)
The Formula
Worked Example
Common Use Cases
- Demand letters: illustrative interest
- Settlement math: time-value estimates
- Teaching: simple vs compound
Pro Tips
- Check statute for rate/method
- Convert days to years carefully
- Don’t treat as court-ready without counsel
Limitations: Prejudgment Interest results are educational practice-management aids only—not legal advice, fee advice, or a substitute for counsel, ethics rules, or engagement letters. Confirm definitions with your firm policies and applicable professional rules.
FAQ
Is this compound interest?
No—this is simple interest. Compounding requires a different formula and legal basis.
How do I enter months?
Use fractional years (6 months ≈ 0.5 years) or days/365 if that matches the rule you are modeling.
Authoritative References
For professional conduct and practice management context, consult:
- American Bar Association — ethics and practice resources
- Law.com — legal industry reporting
- Clio Resources — practice management education