What is the percentage?
Percentage is represented in mathematics as one hundredth. The letter denotes - "%" and is used as a designation of the proportion of something in relation to the whole. The economy also slightly differently answers the question of what interest is, replacing this concept with the fee received by the lender from another person (borrower) for using the financial resources entrusted to him or material values.
What is the annual interest
Economic science presents to investors the notion of "annual interest" as the amount that a borrower is obliged to pay to his lender, in the case of using a loan for exactly one year (360 days conditionally). With an increase or decrease in the term of the order issued by the loan, the amount of interest changes accordingly (increases or decreases).
Its calculation is quite simple: the loan amount is multiplied by the value of the interest rate and the number of days of using the entrusted loan and divided by 360 days.
To calculate the annual interest on your loan, you need to withdraw the amount received in the bank from the amount of funds (with interest) that you must pay.Divide the resulting value by the period of credit use (in years) and multiply the result by 100%.
What is compound interest?
Compound interest, as another indicator of cash flow in a time period, is determined by attaching interest accrued over the period to the principal amount of the next period, and as a result, interest is added to the principal amount as well as added interest in the subsequent period.
The formula for determining compound interest:
- FV = PV * (1+ r) n, where
- FV - the estimated future value;
- PV - known fair value;
- n is the number of years;
- r - interest rate (loan or bank interest);
What is the interest rate
In general, the interest rate is the price of services of a monetary nature, calculated as a percentage relative to the amount taken on credit.
Substantially identical words equal in terms of the term “interest rate” are: loan interest, interest rate, interest rate, interest.
The price that determines the receipt of a cash loan for the implementation of a risk-free project is called the net interest rate.
From the point of view of the classical economy, the interest rate is a reward for savings, a reward for the preference of future consumption.
The main types of money rates on the market include: the rate on treasury bills, the discount rate and the rate on one-day loans between banks.