simple and compound interest

simple interest

the interest that is computed to the principal and then added to it

future value

the value of the money at the end of the term. it is equl to the principal plus interest earned

principal

the amount of money borrowed or invested in the origin date

rate

the annual interest charged by the lender or rate increased by the investment

time or term

the amount of time in years the money is borrowed or invested

Compound Interest

Compound interest has the principal literally be compounded, or increased. The previous years’ interest is added to the principal and counted. 

Simple Interest

when the principal remains constant throughout the entire term. It is equal to the following:

Is = Prt

simple interest formula

f=p+is

f=p(1+rt)

future value formula

p=f/1+rt

principal value formula

r=f-p/pt

rate formula

t=f-p/pr

time or term formula