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Simple Interest

A type of fee paid for the use of money

Principal

The amount of money borrowed or invested.

Rate of Interest

The percent charged or earned on the principal amount.

Time

The duration for which the money is borrowed or invested

Interest Formula

I = P * r * t

Total Amount to be Repaid

Calculated as A = P + I

Percent Increase

The percent of increase from 0.36 to 0.64 is 100%.

Investment Duration

The time for which money is invested

Savings Account Interest

Interest earned on deposited money in a savings account.

Loan Repayment

The total amount paid back to the lender

Annual Simple Interest Rate

The percentage of interest charged or earned per year.

Bond Investment

Investing money in bonds to earn interest over time.

Calculating Interest

Using the formula I = P * r * t to determine the interest earned or paid.

Total Savings Calculation

Finding the total amount in a savings account after a certain period using interest.

Simple Interest Formula

I = P * r * t

Total Amount Formula

P + I = A

Compound Interest Definition

Interest calculated more than once per year.

Simple Interest Definition

Interest calculated once a year.

Compound Interest Formula Factors

Principal

Compound Interest Formula

A formula used to calculate the amount of interest earned or paid on an investment or loan

Logarithms

Mathematical functions that are the inverse of exponentiation

Exponential Equation

An equation in which a variable appears in the exponent

Stocks

Indicate ownership

Stock Price

The highest or lowest amount someone is willing to pay for the stocks.

Shares

A portion of the ownership of a company or corporation

Dividend

The monetary portion of the corporation's earnings decided by its Board of Directors.

Preferred Stockholders

Stockholders who have limited voting rights but receive priorities in claiming a fixed dividend.

Common Stockholders

The real owners of the company

Po

Stock price at time 0.

Dt

The expected dividend at time t.

T

The number of years of non-constant growth.

gc

The long-term constant growth rate in dividends.

r

The required return on the stock.

gc < r

Condition indicating that the growth rate of dividends is less than the required return on the stock.