Finance has always been full with complexity, calculation is full with confusion and lots and lots of basic and multifarious operation. Off- course it is hard to calculate your financial investment, but to keep a watchful eye on your hard earned money is always good.
Simple calculation will keep you aware and will also minimize the chance of any burglary from the side of your financer.
However, I would like to make clear that the amount calculated by you may find some difference from the calculation calculated by financer. The reason can be many, advance mode of calculation, market fluctuation, and variation in Interest rate.
Here I will suggest simple steps to calculate your finance charges, hope it will help you. A little help is lot to boost the objective of my write up.
Being an aware customer you should know about three basic terminologies….
Principal: The amount you are seeking for
Interest: The charge or extra percentage lender wants from you to earn profit
Amount: Finally the amount you have to pay back.
Now let us move the most important part of money lending, the interest rate. The interest can be constant and variable. Variable interest rates are called compound interest rate and the principal generally change. It depends on the time you take to pay the money back. Simple Interest rate are easy to calculate, but now it is not vividly used. Here I am giving you the formula…..
Simple Interest = Principal × Rate × Time/ 100
The whole of the formula is divided by 100 just because of the rate, it is in percentage.
Amount= Principal + Interest
The money in the case is paid in for short installments and generally lend for week or month. To convert the time, Say a month into year you need to multiply the month by 12. In the same way to convert week into year, you need to multiply it by 52.
By these simple formula you can keep an eye on the amount invested and also help your child with mathematical calculation.
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