Calculation period and calculation method:
Interest is divided into simple interest and compound interest. Interest is generally calculated on an annual basis, but it can also be calculated on a period not equal to one year. The interest-bearing period in engineering economics, such as compound interest once a month and once a quarter, is the so-called interest-bearing period and can also be interpreted as the calculation interval of interest. Interest rate during interest period = annual interest rate ÷ multiple of interest within one year.
Example of interest period:
The annual interest rate of a loan is 12%, and the contract stipulates to pay interest once every quarter, so the interest rate during the interest-bearing period is quarterly. There are four quarters in a year, and the interest is calculated in four times, so the interest rate for the interest-bearing period is. Quarterly interest = 12%÷4=3%.
If the loan contract stipulates that the interest shall be calculated once a month, the interest rate during the interest-bearing period shall be the monthly interest rate. A year is 12 months, and the interest is 12 times, so the interest rate during the interest-bearing period is. Monthly interest =12% ÷12 =1%.
Introduction of annual interest rate and interest:
Introduction of annual interest rate:
The annual interest rate refers to the deposit interest rate for one year. The so-called interest rate is the abbreviation of "interest rate", which refers to the ratio of interest amount to deposit principal or loan principal in a certain period of time. Usually divided into annual interest rate, monthly interest rate and daily interest rate. The annual interest rate is expressed as a percentage of the principal, the monthly interest rate as a percentage, and the daily interest rate as a percentage.
When the economic development is in the growth stage, the investment opportunities of banks increase, the demand in loanable funds increases and the interest rate rises; On the other hand, when the economy is in a downturn and the society is in a depression, banks' willingness to invest will decrease, so will the demand for loanable funds, and the market interest rate will generally be lower.
Interest introduction:
Interest refers to the reward obtained by the fund owner from lending the fund, which comes from part of the profits formed by the producers using the fund to play their business functions. Interest is one of the manifestations of the time value of funds. From its formal point of view, it is the reward that the monetary owner gets from the borrower for issuing monetary funds.