This is called Simple Interest. The formula is
A= P(1+rt)
where P is the Principal, r is the Rate and t the time in years.
eg $1000 at 4% over 5 years
A=1000 (1+0.04*5) where * means multiply
= 1000 (1.20)
= $1200
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With compound interest, the interest due for any period attracts interest for all subsequent periods. As a result, compound interest, for the same rate, is greater.With compound interest, the interest due for any period attracts interest for all subsequent periods. As a result, compound interest, for the same rate, is greater.With compound interest, the interest due for any period attracts interest for all subsequent periods. As a result, compound interest, for the same rate, is greater.With compound interest, the interest due for any period attracts interest for all subsequent periods. As a result, compound interest, for the same rate, is greater.
compound interest increases interest more than simple interest
A man Iinvests 5000 for 2 years at compound intrest. After 1 year his money amounts to 5150. Find the intrest for the second year.
Compound Interest
Usually no. Most institutions charge (and pay) compound interest, NOT simple interest.Usually no. Most institutions charge (and pay) compound interest, NOT simple interest.Usually no. Most institutions charge (and pay) compound interest, NOT simple interest.Usually no. Most institutions charge (and pay) compound interest, NOT simple interest.