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Simple interest, as opposed to compound interest, is rare. With an investment that pays simple interest, the amount of interest accumulated each period depends solely on the amount invested, not on prior interest earned and left in the account.
The following single payment equation applies to simple interest: F = P (1 + I * n)
Example: If $100 is invested at 6% interest (compound interest) for four years, the amount accumulated at the end of four years is:
F = P (1 + i) n = $100 (F/P,6%,4)
= $100 (1.262) = $126.20
If, however, interest is simple rather than compound, then the amount accumulated at the end of four years is only:
F = P (1 + in) = $100 [ 1 + (0.06)(4) ]
= $100 (1.24) = $124.00
Негізгі бет Simple Interest Rate - Calculations and Concept - Why simple interest in unpopular?
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