Simple Interest and Compound Interest

lend

1. to give something to someone or allow them to use something that belongs to you, which they have to return to you later 2. (formal) to give a particular quality to a person or a situation

income

Earnings from work or investment

Simple Interest Formula

I=P x R x T

MV formula

MV = P(1+RT)

expense

Money spent

principal

The amount of money borrowed or invested

loan

a thing that is borrowed, especially a sum of money that is expected to be paid back with interest.

interest

amount paid or earned for the use of money

budget

an estimate of income and expenditure for a set period of time.

annual

happening once a year

compound interest

interest calculated on both the principal and the accrued interest

I

interest earned (amount of money the bank pays you)

simple interest

interest earned when a loan or investment is repaid in a lump sum

Simple Interest

interest paid on the principal alone

R

interest rate usually given as a percent (this must change to decimal before plugging it into formula)

T

must be measured in years or converted to years by dividing by 12 months

time

number of days, months or years that the money is borrowed or invested

rate of interest

percent for a given time period, usually one year

P

principal amount invested or borrowed

credit

the ability of a customer to obtain goods or services before payment, based on the trust that payment will be made in the future.

rate

the percent of the principal paid as interest per time period

save

to set aside money for a later use.

Maturity Value

total amount of money due by the end of a loan period, the amount of loan and interest