What is simple interest What does simple interest mean in a bank

In the financial business, there is a type of interest called simple interest. Hypothesis p. is the principal, r is the interest rate of the interest-bearing period, n is the number of interest-bearing periods, i is the simple interest that should be paid in n interest-bearing periods, and p is the sum of principal and interest (principal and interest), then the following conclusion is obtained.

The interest for an interest-bearing period is p. r, the simple interest that should be paid in n interest-bearing periods is i=p. r, at this time the sum of benli is p p.

i＝p。＋p。r n then obtains a relationship between principal and interest and the number of interest-bearing periods, i.e., the simple interest model.

p＝p。（1+rn)

For example, if someone deposits 1,000 yuan in the bank, the annual interest rate for a fixed period of 3 years is to find the sum of interest and principal and interest that should be obtained after the expiration of 3 years.

Principal p. 1000, the annual interest rate is r, and the number of interest-bearing periods is n 3, so the interest (i.e. simple interest) due after the expiration of 3 years is.

i＝p。R n 1000 yuan.

The sum of benevolent interests is p p. ＋i＝1000＋81＋1081

In addition, there is the issue of compound interest. If you are interested, you can contact me 02039365606

Simple interest means that no matter how long your deposit period is, your interest will not be added to your deposit principal and the interest will be double-calculated. (The principal amount is the initial amount you deposit in the bank).

Bank simple interest. It refers to the interest calculated according to the fixed principal, which is a way to calculate interest. Simple interest is calculated based on the amount or amount of the loan (principal), the length of the asset's life, and the general annual interest rate in the sales market.

level and other factors.

In real economic life, it is sometimes necessary to determine the present value of the seller according to the final value. For example, when applying to the bank for discount with an unexpired bill, the bank deducts the accrued interest from the maturity value of the bill at a certain interest rate from the date of borrowing to the maturity date of the bill, and pays the balance to the bearer, and the bill is transferred to the bank. The interest rate used at the time of discounting is called the discount rate.

The calculated interest is called the discount interest, and the balance after deducting the discount interest is called the present value.

Simple interest and compound interest.

The differences are as follows:

1. The concept is different;

2. The interest rate is different;

3. Different interest calculation methods;

4. Different calculation methods;

5. The concept is different.

Simple interest: Simple interest refers to a fixed principal amount whose interest is settled at one time after maturity, and the interest beyond the principal does not generate additional interest. Compound interest: Compound interest refers to the fact that the previous principal and interest are calculated again as the principal of the next time, resulting in new interest.

Interest is different. Simple interest: The interest result of simple interest will be relatively low.

For the same principal, if the investment period is the same and the annual interest rate of the investment is the same, the result of the calculation by simple interest is lower than that of compound interest. From the point of view of statistics and data science knowledge, if the time period is longer, the difference between simple interest and compound interest will become larger and larger. Compound interest:

The interest result of compound interest will be higher.

Interest = Principal multiplied by interest rate multiplied by deposit term. For fixed deposits, if it is agreed to be automatically rolled over, the interest is added to the original deposit, which is equivalent to compound interest. At present, some banks, depositors do not declare automatic rollover, and if they reach a fixed deposit period in the future, it will also be regarded as a rollover, which is equivalent to calculating compound interest (this situation has been encountered).

However, if the withdrawal is not completed in the second storage period, the expiration time shall be calculated as the current account.

Simple interest refers to a method of calculating interest at a certain interest rate at a fixed period of time, when the interest generated by the principal is no longer included in the interest calculation base. This calculation is common in the financial industry.

The easy-to-understand explanation is that simple interest is a method of calculating interest, and the interest obtained each year is only calculated as a fixed proportion of the principal, and compound interest will not be calculated according to multi-year interest. This is different from compound interest, which takes both the principal amount and the calculated interest into the base, and then calculates the interest based on a certain period of time.

Simple interest is calculated on the basis of principal only, while compound interest is calculated on the basis of principal and calculated interest.

Application scenarios: Simple interest is often used in some scenarios such as short-term loans and deposits. In the case of low interest rates, the growth amount of simple interest calculation is relatively small, but it also has a different stability and controllability than compound interest calculation.

Starting from understanding the similarities and differences between simple interest and compound interest, we can go deep into their advantages, disadvantages and applications in practical application.

Compound interest is more suitable for financial investments with high requirements for long-term stability and sustainability, such as pensions, education reserves, etc. Because under the compound interest calculation method, the same principal and interest rate, the interest for many years will continue to be included in the base, and the total income will be higher and higher. But for short-term loans, savings, etc., simple interest is more applicable.

In the short term, the simple interest calculation method is relatively simple and straightforward, which is easy to manage and control.

In addition, simple interest can also achieve higher liquidity of funds. Because the interest accrued in simple interest can be earned every year, you can choose to withdraw cash in advance at any time. This is very different from the compound interest calculation method, where the income needs to be accumulated within a certain period of time and cannot be withdrawn at any time.

To sum up, simple interest is a common interest calculation method, which is often used in scenarios such as short-term loans and deposits, and the calculation method is simple and controllable. In scenarios with high demand, such as financial investment, the compound interest calculation method is more applicable, because it can continuously add long-term interest to the base to form a continuous compounding effect, so as to better increase the total capital. <>

Question 1: What is Simple Interest?

Question 2: What does simple interest mean?

Simple interest is the simplest figure in the whole leakage group interest rate family, and it is also the most well-known. Our usual method of calculating interest on savings is simple interest. That is, no matter how long your deposit period is, your interest will not be added to your deposit principal and double-calculated interest.

To explain, the principal is the initial amount you deposit in the bank).

For example, if you deposit 100 yuan in the bank now, the annual interest rate is 10%, and the deposit period is 2 years, how will your interest be calculated? That is, using 100*10*2% is equal to 20 yuan. It is worth noting that by the end of the first year, your interest is 10 yuan, and in the second year, the base for calculating interest is still 100 yuan, and the auction does not add the interest of 10 yuan to become 110 yuan, so at the end of the second year, the total interest on the orange is only 20 yuan.

In the financial industry, it can be widely used, and the calculation of interest and discount value depends on it.