1_Simple Interest Flashcards
Simple Interest Formula:
I = Prt
Original amount of money borrowed or invested
Principal or Present Value, P
In percent,; dictates the increase of the principal
Interest rate, r
Amount of time money was borrowed or invested
Time or Term of the loan, t
Amount calculated from the principal using the interest rate based on the time
Interest
Sum of the Principal and Interest
Future Value or Maturity Value, F = P + I,
Type of simple interest; assumption → 365 days in a year
Exact Interest
Type of simple interest; assumption → 360 days in a year
Ordinary Interest
Date when a loan or investment is made
Origin Date
Date when the loan is paid or the investment is terminated
Maturity Date
Actual # of days
Actual Time
Assumption → 1 month = 30 days
Approximate Time
- Simple interest collected or deducted in advance from the amount of the loan
- The borrower needs to pay back the actual amount borrowed since the
interest has already been deducted in advance.
Simple discount
Interest computed on the sum of the original Principal and the interest accumulated
Compound discount/interest
Number of times that interest is computed in the span of 1 year
Frequency of conversion, m
