Calulating Interest?

Question

I am still learning my new calculator and still like to know the basic math in figurin the interest expense for $850.00 - 60 months at 8%?

Answer 1

well assuming the 8% is SIMPLE interest

Interest = (p) (r)( t), where p = 850, r=0.08/yr and t= 60mo/12 = 5 years

So simple interest expense is = $340

Now, if interest is COMPOUNDED: we can do several things, first find out how much you will have to pay in 5 years, i.e.
FV = P {(1+r)^n} = $1248.93, now we subtract the "p" which is also called Principal, so $1248.93 - $850 = $398.93 = compound Interest expense

Answer 2

Depends whether it's compound or not and it's annual interest.. If not then you multiply as follows

850 x 8/100 =70
70 x 60/12 = 350

If compound then it's

850 x 8/100 = 70 (1st year)
Then add the interest to the principle and it's the same for each year so do it five times.

Answer 3

If you have a financial calculator, you'll have the necessary buttons to solve this.

The 850 would be PV (present value),
60 would be n (time), and
0.08 / 12 would be %i (periodic interest rate).

Once you've entered this, you'll solve for FV (future value).

To get your total interest, you'd subtract the two.

Answer 4

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