Simple Interest
To determine future value (FV) using simple interest (i.e., without compounding):
where PV is the present value or principal, t is the time in years (or a fraction of year), and r stands for the per annum interest rate. Simple interest is rarely used, as compounding is considered more meaningful. Indeed, the Future Value in this case grows linearly (it's a linear function of the initial investment): it doesn't take into account the fact that the interest earned might be compounded itself and produce further interest (which corresponds to an exponential growth of the initial investment -see below-).
Read more about this topic: Future Value
Famous quotes containing the words simple and/or interest:
“No slogan of democracy; no battle cry of freedom is more striving then the American parent’s simple statement which all of you have heard many times: ‘I want my child to go to college.’”
—Lyndon Baines Johnson (1908–1973)
“There is a blessed necessity by which the interest of men is always driving them to the right; and, again, making all crime mean and ugly.”
—Ralph Waldo Emerson (1803–1882)