Suppose you borrow 20 thousand yuan for a period of one year.
1. For private loans, interest is calculated with simple interest. Bank deposit is a simple method of interest calculation.
Interest = principal × interest rate × term
One-year interest =20000×2%× 12= 4800 yuan.
2. usury companies use compound interest to calculate interest, which is compound interest.
The formula for calculating interest by compound interest is:
F=P×( 1+i)N (power) f: compound interest final value p: principal I: interest rate n: integral multiple of interest rate acquisition time.
Sum of principal and interest = 20000× (1+2%)12 = 25364.84 yuan.
One-year interest =25364.84-20000= 5364.84 yuan.
Extended data:
1. Money other than the principal of deposits and loans (different from "principal").
2. The abstract interest point refers to the value added when monetary funds are injected into the real economy and returned. Generally speaking, interest refers to the remuneration paid by the borrower (debtor) to the lender (creditor) for using the borrowed currency or capital. Also known as the symmetry of sub-fund and parent fund (principal). The calculation formula of interest is: interest = principal × interest rate × deposit period (i.e. time).
Interest is the reward that the fund owner gets for lending the fund, which comes from a part of the profits that the producer makes by using the fund to play its operational functions. Refers to the value-added amount brought by monetary funds injected into the real economy and returned. The calculation formula is: interest = principal × interest rate × deposit period × 100%.
3. Classification of bank interest
According to the different nature of banking business, it can be divided into bank interest receivable and bank interest payable.
Interest receivable refers to the remuneration that the bank obtains from the borrower by lending to the borrower; It is the price that the borrower must pay for using the funds; It is also part of the bank's profits.
Interest payable refers to the remuneration paid to depositors by banks to absorb their deposits; It is the price that banks must pay to absorb deposits, and it is also part of the cost of banks.
References:
Baidu encyclopedia-interest