Illustrating simple and compound interest

Lender or creditor

person or institution who invests the money or makes the funds available

Borrower or debtor

person who owes the money or avails of the funds from the lender

Origin or load date

date on which money is received by the borrower

Maturity date

date on which the money borrowed or loan is to be completely repaid

Time or term

amount of time in years the money is borrowed or invested; length of time between the origin and maturity dates

Principal

amount of money borrowed or invested on the origin date

Rate

annual rate usually in percent, charged by the lender, or rate of increase of the investment

Interest

amount paid or earned for the use of money

Simple interest

interest that its computed on the principal and then added to it

Compound interest

interest computed on the principal and also on the accumulated

Simple Interest

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Compound interest

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