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:
“The thought of our past years in me doth breed
Perpetual benediction: not indeed
For that which is most worthy to be blest—
Delight and liberty, the simple creed
Of Childhood, whether busy or at rest,
With new-fledged hope still fluttering in his breast:—”
—William Wordsworth (1770–1850)
“Those people have no real interest in a science who only begin to get excited about it when they themselves have made discoveries in it.”
—Friedrich Nietzsche (1844–1900)