SIMPLE AND COMPOUND INTEREST

Interest that is computed on the principal. The interest remains constant throughout the term.

A person (or institution) who owes the money or avail of the funds from the lender.

Date on which money is received by the borrower.

A person (or institution) who invests the money or makes funds available.

Amount of money borrowed or invested on the origin date.

Date on which the money borrowed, or loan is to be completely repaid.

Amount of time in years the money is borrowed or invested, length of time between the origin and maturity dates.

Usually in percent, charged by the lender, or rate of increase of the investment.

Amount paid or earned.

The interest computed on the principal and also the accumulated past interest, so compound interest is a way to earn money because you don't just earn using your original money, but also the interest you earned.