1. Simple interest: Simple interest is calculated according to principal, interest rate and time. Interest = principal x interest rate x time. For example, if you borrow 100 yuan, the annual interest rate is 5%, and the loan term is one year, then the interest = 100 X5% x 1 = 5 yuan. Compound interest: compound interest means that the principal and interest increase together.

2. Annuity: Annuity is to pay a certain amount within a specified period of time, usually annually. Annuities are usually used in areas such as pensions, insurance and real estate. The calculation formula of annuity is: a = pxrx1+r n/1+r n-1where a is the annuity amount, p is the principal, r is the interest rate, and n is the term (year).

3. Discount: Discount refers to converting the present value of future cash flows into present value. In the discount calculation, the time value of future cash flow is considered. The discount formula is: V = CX 1- 1+R-N/R, where v is the present value, c is the future cash flow, r is the interest rate and n is the term (year).

Advantages and disadvantages of interest

First, advantages

1. Stimulate saving and investment: The existence of benefits makes people more willing to save money and encourages investors to find more profitable projects to invest. This will help to increase capital accumulation and economic growth. Risk management: Interest can be used as a risk management tool.

2. Resource allocation: Interest can be used as a price signal to help guide the flow of funds to more efficient and profitable projects. This helps to optimize the allocation of resources and improve the overall economic efficiency. By charging loan interest, lenders can compensate their loan risks and encourage borrowers to repay their loans on time. This helps to reduce the risk of the financial system.

Second, shortcomings.

1. economic burden: for some low-income families or people in poor areas, loans with high interest rates may become a heavy economic burden. They may not be able to bear high interest rates, leading to debt accumulation and financial difficulties. Because of interest, it is easier for wealthy borrowers to get loans.

2. Financial risk: In some cases, high-interest loans may cause borrowers to fall into excessive debt burden, thus increasing the risk of default and the fragility of the financial system. When formulating financial policies and designing financial products, we need to weigh the pros and cons of interests and consider how to balance the needs and risks of different stakeholders.