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Chapter 7
Calculations – simple interest
2.1 Introduction
With simple interest the interest on a loan or deposit is calculated by
reference to the principal only – i.e. the original sum invested.
2.2 Calculation
V = P (1 + r × n)
Where V = future value
P = initial investment (principal)
r = interest rate (expressed as a decimal)
n = number of time periods
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