Simple and Compound Interest real Life examples Simple Interest in Real Life 1. Saving Money in a Bank: Scenario: We deposit $1,000 in a savings account at a bank. The bank offers a 5% annual simple interest rate. Calculation: Principal (P): $1,000 Rate (R): 5% per year Time (T): 3 years Simple Interest (SI) Formula: […]
Read More →Compound interest – Meaning, Formula and Solved Examples Compound interest is a way of calculating interest where the interest earned over time is added back to the principal, so that the interest in the next period is calculated on the new total (which includes the previously earned interest). This means we earn interest on the […]
Read More →Difference between Simple Interest and Compound Interest We know that many financial services especially in banking simple interest and compound interest are widely used. Loans such as educational loans, auto loans, use simple interest. Compound interest mostly used by the saving account as it pay the interest. The main difference between simple interest and compound […]
Read More →Simple Interest: Definition, Examples and Formulas What is interest? First lets understand what is Interest. When we borrow money from a bank, we must pay a fee in addition to the amount borrowed. The extra money we pay is known as the interest. Interest is an additional amount of money that is paid by the […]
Read More →Simple Interest Word Problems Example 1: What is the simple interest and amount of $ 2000 at the rate of 8% per year for 2 1/2 years. Solution: Principal amount = P = $ 2000 Rate of interest per year = R = 8% Time for which it is borrowed = T = 2 1/2 year Thus, simple […]
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