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figuring interest
I'm going to try to give a short answer, which is difficult for me and difficult for this subject.
IIRC from finance classes in college there are about 50 different ways to calculate interest (which is very beneficial if you're the LENDEER), but let's try to make this EASY. Let's say you're borrowing or lending to a "close" family member.
P(rinciple) $500
R(ate) .08 (8%)
T(ime) 1 1/4 (1/4 year is 3 months, so 15 months = 1 1/4
I(interest) = P X R X T
I =PRT
500 X .08 X 1.25
500 X .08 =40
40 X 1.25 = 50 is your short, simple answer. This is what's known as SIMPLE INTEREST, which is something you'll almost never encounter in the "real world".
HOWEVER, if you went to a USED CAR DEALER, or a FINANCE COMPANY you would find yourself paying MUCH MORE than $50 for this simple transaction. I'm not knocking either of those businesses, just pointing out the facts.
Good luck and I hope this helped.
Frank
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