We pay interest when we use other peoples money such as when we borrow from a bank or a friend. If the interest is calculated once a year then the interest is called simple interest. Simple interest simple interest tricks simple interest. The difference between the compound and simple interest for 3 years will be.
Improve your math knowledge with free questions in compound interest. Simple interest is the interest that is computed on the original principal only. The mathematical formula for calculating compound interest depends on. Simple and compound 8 interest interest is the fee paid for borrowed money. Write a compound interest function to model the situation. While balancing your checkbook or calculating your monthly expenditures on espresso. Interest is the fixed amount paid on borrowed money. We receive interest when we let others use our money for example, by depositing money in a savings account or making a loan.
Simple and compound interest math for business and life. Then find the balance after the given number of years. Find out the differences between simple and compound interest. Will martyn double his money in 15 years by investing his money with bank of. Recall that simple interest is earned or paid only on the principal. Learn about simple and compound interest investopedia. A 5 p1 1 rt where a represents the amount of money in the account at the end of the time period, p is the principal, r is the annual interest rate, and t is the time in years. Gcse maths compound and simple interest difference. The interest, typically expressed as a percentage, can be either simple or compounded. In this lesson we take a look at interest simple interest and compound interest as well as consider key xample questions and xercises.
Simple interest i 5 100 prn compound interest a 5 1 100 p r n 1 final amount i 5 a 2 p interest where p is the principal r is the interest rate per period expressed as a percentage n is the number of periods use 1 year 5 52 weeks 5 365 days. Simple and compound interest worksheet 1 write as decimals. The simple interest was never so simple in the books and now its our duty to provide you the solution for your maths problems. In every exam you will get at least 34 questions from this topic.
The sum of the principal and interest is called the amount. If simple interest is paid, interest is calculated only on the principal. Interest is the cost of borrowing money, where the borrower pays a fee to the lender for the loan. Simple and compound interest finite math lumen learning. Interest is defined as the cost of borrowing money or the rate paid on a deposit to.
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