Study guides
Simple interest: when to use 360 or 365 days
Count the days, choose the year basis, and find interest and maturity value with a side-by-side example.
A place to start
Business math: interest, discount, and present value
Choose the right model, follow a worked example, and practice simple interest, bank discount, or compound interest.
Choose the model before the formula
Find out when the money moves, what the percentage applies to, and whether interest earns more interest. Similar-looking rates can describe different calculations.
| The question describes… | Start with | Check first |
|---|---|---|
| Interest calculated on the original principal | Simple interest I = P × r × t | Annual rate, time in years, and the stated 360- or 365-day basis. |
| A discount withheld before the borrower receives money | Bank discount Proceeds = maturity value − discount | The discount applies to maturity value. Compare the charge with money actually received. |
| Growth over repeated compounding periods, or a deposit needed today | Compound interest & present value FV = PV(1 + i)ⁿ | A rate per period and a matching number of periods; distinguish nominal and effective rates. |
Follow a worked example
Study guides
Bank discount: find proceeds and compare interest
See why the amount received differs from the amount repaid, and why a discount rate is not the rate on cash received.
Study guides
Compound interest and present value, step by step
Match the rate to the compounding period, grow a deposit, and reverse the calculation to find a present value.
Before the calculator
Make the units agree
These guides teach classroom models with stated assumptions. Use the convention in your course problem.
- Name the unknownInterest, full balance, proceeds, and present value are different quantities. Write the one requested.
- Draw the timelinePlace the opening amount and the future date. Convert months to years or years to compounding periods as needed.
- Check the resultKeep precision until the final step, then label the unit. With positive interest, a single deposit’s future value should exceed its present value.
Practice the same topics
Each topic brings its available public reviewers, cards, and exams together.
Need a study routine? Compare reviewers, flashcards, and practice exams, then choose the format that fits the lesson.