Simple and Compound Interest

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8Simple and CompoundInterestInterest is the fee paid for borrowed money. We receiveinterest when we let others use our money (for example, bydepositing money in a savings account or making a loan).We payinterest when we use other people s money (suchas when we borrow from a bank or a friend). Are you a receiver or a payer ?In this chapter we will study Simple and compoundinterest. Simple interestis Interest that is calculated onthe balance owed but not on previous Interest . Compoundinterest, on the other hand, is Interest calculated on anybalance owed including previous Interest . Interest for loansis generally calculated using Simple Interest , while interestfor savings accounts is generally calculated using com-pound concepts of this chapter are used in many upcom-ing topics of the text.

a Computing simple interest and maturity value— loans stated in months or years b Counting days and determining maturity date— loans stated in days c Computing simple interest—loans stated in days Unit 8.2 Solving for principal,rate,and time a Solving for P (principal) and T (time) b Solving for R (rate) Unit 8.3 Compound interest

  Rates, Simple