Understanding Interest Calculations

Simple Interest Formula

I = P × r × t
Interest = Principal × Rate × Time
Best for short-term calculations

Compound Interest Formula

A = P(1 + r/n)^(nt)
Includes compounding frequency for accurate long-term growth calculations

Key Differences

Simple interest: Linear growth
Compound interest: Exponential growth
Choose based on your financial goals

Savings Strategy

Use compound interest for long-term savings and investments to maximize your returns through compounding

Loan Strategy

Understand how interest accumulates on loans to make informed borrowing decisions and save money

Wealth Building

Leverage the power of compound interest for retirement planning and long-term wealth accumulation