Simple

1
Simple Compounding Interest
2
Principle

• The amount of a debt or investment.
• The face value of a stock or bond.

3
Simple Interest

• Interest that is paid only on the original
  principal or on the amount originally borrowed.
• If you put 100 dollars in savings, and there is
  a rate of 6 simple interest, at the end of one
  year you will have 106.
• 100 deposit 6 interest 106

4
Compound Interest

• Interest paid on the principal and the previously
  earned interest.
• Interest can be compounded several ways
• annually, every year
• semiannually, every six months
• quarterly, every three months
• monthly
• daily
• The more often your money is compounded the more
  interest your money earns.

5

• When might we use simple interest?
• When might you use compounding interest?