Calculating Simple and Compound Interest

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What is the formula for calculating Simple Interest?

Back

Simple Interest = Principal × Rate × Time

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How do you calculate the total balance in an account using Simple Interest?

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Total Balance = Simple Interest + Principal

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What is the formula for calculating Compound Interest?

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Compound Interest = Principal × (1 + Rate)^Time - Principal

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How do you calculate the total amount in an account with Compound Interest?

Back

Total Amount = Principal × (1 + Rate)^Time

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What does 'Principal' refer to in interest calculations?

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Principal is the initial amount of money deposited or borrowed.

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What does 'Rate' refer to in interest calculations?

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Rate is the percentage of interest charged or earned on the principal.

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What does 'Time' refer to in interest calculations?

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Time is the duration for which the money is invested or borrowed, usually in years.

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How do you find the interest paid on a loan?

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Interest = Total Amount - Principal

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What is the difference between Simple Interest and Compound Interest?

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Simple Interest is calculated only on the principal, while Compound Interest is calculated on the principal plus any interest that has been added.

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How do you calculate the interest earned on a simple interest investment after a certain number of years?

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Interest Earned = Principal × Rate × Time