What is Interest Rate Formula?
Interest rate formula is a mathematical equation which establishes a relation between the interest rate amount, principal amount, percent rate of interest and duration for which the amount is borrowed. Interest Rate Formula helps us to find out the amount of money that has to be returned to the lender after the specified time period. Let’s understand what is simple interest and compound interest and their respective interest rate formulas separately.
Interest Rate Formula
Interest Rate Formula is a mathematical formula used to find the percent rate which is charged on Principle to yield the final amount. Interest Rate is a fundamental concept that comes into play whenever money changes hands. Whether someone is borrowing, lending, or investing money, interest rates play a crucial role. Interest is of two types namely simple interest and compound interest. Interest Rates can be charged daily, monthly, weekly, quarterly, half-yearly, and yearly.
This article will explain the basics of interest rates, the difference between simple and compound interest, and provide the Interest Rate formulas for both types.
Table of Content
- What is Interest Rate?
- What is Interest Rate Formula?
- Simple Interest Rate
- Compound Interest Rate
- Simple Interest Rate vs Compound Interest Rate