2 cent interest refers to the monthly interest, that is, the monthly interest rate is 2%. Suppose you borrow 20,000 yuan and the term is one year.

1. For private loans, use a single Calculate interest. The interest on bank deposits is the simple interest method = principal × interest rate × one-year interest = 20,000 × 2% × 12 = 4,800 yuan.

2. The loan shark company uses compound interest to calculate interest, that is, compound interest to calculate interest. The formula is: F=P×(1+i)N (power) F: compound interest terminal value P: Principal i: Interest rate N: The sum of principal and interest is an integer multiple of the interest rate acquisition time = 20000 × (1+2%)^12 = 25364.84 yuan. One year’s interest = 25364.84-20000 = 5364.84 yuan.

Extended information:

Interest generating factors:

1. Delay in consumption

When a lender lends money, it means delay consumption of consumer goods. According to the principle of time preference, consumers will prefer current goods to future goods, so positive interest rates will appear in the free market.

2. Expected inflation

Most economies will experience inflation, which means that an amount of money will buy fewer goods in the future than now. Therefore, the borrower needs to compensate the lender for losses during this period.

3. Substitute investments

Lenders have the option to put their money in other investments. Due to opportunity costs, lenders who lend money are giving up possible returns on other investments. Borrowers compete with other investments for this funding.

4. Investment risks

The borrower is at risk of bankruptcy, absconding or non-payment of debts at any time. Lenders need to charge additional money to ensure that in these circumstances, they still Compensation is available.

5. Liquidity preference

People would prefer that their funds or resources can be traded immediately at any time, rather than requiring time or money to retrieve them. Interest rates also compensate for this.

Baidu Encyclopedia-Interest