Tuesday, January 7, 2014

Jan 7 Tuesday Lesson Summary

Percentage: Parts per 100 of a whole

Similar across both types of interest
Principal amount (eg. $10000)
Rate (eg. 5% p.a.)
Duration/time (eg. 4 years)

Rate and duration must have the 'same time frame', like pa (per annum) and 4 months is not acceptable. 

Money must always be expressed in 2dp!

Calculating Interest
Simple:
Interest = (Principal x rate x duration) / 100

In the event if the duration is in 'months' and rate is in 'year'
divide the duration by 12 (since 1 year has 12 months, obviously)

In the event the rate is in 'months' and duration is in 'year'
Multiply the rate by 12.

Compound:
Year(final year) = principal amount x (1 + rate in decimals)^(final year)

Same rules apply for 'same time frame'.

Hire Purchase
Principal amount/capital + interest paid off in installments

Disclaimer: If I got something wrong please comment or something and this is the first ever post so I don't know what Mr Ingham is going to think about it :(

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