What is the formula for calculating the interest rate?
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Divide your interest rate by the number of payments you'll make in the year (interest rates are expressed annually).
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Answer:
There are two types of interest which can be calculated using a different formula
Simple Interest
To calculate simple interest, the formula used is (P × R × T)/ 100
Compound Interest
The formula for calculating compound interest is P × (1 + r/100)^t
∴ where P is the principal amount, R is for the rate of interest and t is for time.
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