Difference between revisions of "Calculate Interest"
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Most people are aware of the concept of interest, but not everyone knows how to calculate it. Interest is the value that we add to a loan or a deposit to pay for the benefit of using someone else’s money over time. Interest can be calculated in three basic ways. Simple interest is the easiest calculation, generally for short term loans. Compound interest is a bit more complicated and a bit more valuable. Finally, continuously compounding interest grows at the fastest rate and is the formula that most banks use for mortgage loans. The information you need for any of these calculations is generally the same, but the math is a bit different for each. | Most people are aware of the concept of interest, but not everyone knows how to calculate it. Interest is the value that we add to a loan or a deposit to pay for the benefit of using someone else’s money over time. Interest can be calculated in three basic ways. Simple interest is the easiest calculation, generally for short term loans. Compound interest is a bit more complicated and a bit more valuable. Finally, continuously compounding interest grows at the fastest rate and is the formula that most banks use for mortgage loans. The information you need for any of these calculations is generally the same, but the math is a bit different for each. | ||
| − | [[Category:Economics]] | + | [[Category: Economics]] |
==Steps== | ==Steps== | ||
===Calculating Simple Interest=== | ===Calculating Simple Interest=== | ||
