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Re: Simple interest
Posted:
Jun 30, 2013 7:59 PM


Simple interest is "simply"...
Principle X Rate X Time
1000 * 0.06 * 6 = 360
As compared to "compound interest" which "compounds" the interest each period...
1000 * 1.06 * 1.06 * 1.06 * 1.06 * 1.06 * 1.06
1000 * 1.06 ^ 6 = 1419 (thus the interest is 419, compared to 360 when doing simple interest)
Note that simple interest involves multiplication and compound interest involves exponentiation.
Bob Hansen
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