**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 :(*

## No comments:

## Post a Comment