Get a bank account/Loan from the advertisements advertising interest rates *Calculate the interest that would accumulate if you invested a certain amount of money in a savings account or spent a specific amount of money on a car * Discuss the difference between interest for a savings account and as loan.
Answers
Answer:
Simple Interest Formula
The Simple Interest Formula is given by
Simple Interest = Principal × Interest Rate × Time
I = Prt where
The Principal (P) is the amount of money deposited or borrowed.
The Interest Rate (r) is a percent of the principal earned or paid.
The Time (t) is the length of time the money is deposited or borrowed.
Step-by-step explanation:
Knowing how interest on savings accounts works can help investors earn as much as possible on the money they save. Interest on a savings account is the amount of money a bank or financial institution pays a depositor for holding their money with the bank. In a way, a bank borrows money from their depositors by using the deposited funds to lend money to other customers. In turn, the bank pays the depositor interest for their savings account balance while simultaneously charging their loan customers a higher interest rate than what was paid to their depositors.
Interest on savings accounts is expressed in percentage terms. For example, let's say you have $1,000 in the bank; the account might earn 1% interest. Unfortunately, most banks pay less than 1% interest on savings accounts due to historically low-interest rates.
However, if you reinvest the interest you earned on your savings account and the initial amount deposited, you'll earn even more money in the long term. This process of earning interest on your savings plus earning interest on all of the accumulated interest from previous periods is called compounding. Investors can use the concept of compounding interest to build up their savings and create wealth.