Simple interest
PV = present value
i = interest rate
n = number of compounding periods
WHAT IS IT ?
Simple interest is a quick method of calculating the interest charge on a loan. Simple interest is determined by multiplying the daily interest rate by the principal by the number of days that elapse between payments.
CALCULATION:
Enter present value
Enter interest rate
Enter number of compounding period
EXAMPLE:
The interest rate is 5% per year. We deposited 10,000 Euros into the bank. We withdraw the interest from the deposit each time. We do this for 5 years.
So, we substitute the values into the formula
BH = 10000 * (0.05 * 5),
BH = 12500
After 5 years, we have saved 12,500 Euros including the principal (assuming we withdrew the interest).
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