What is Interest: Definition and 296 Discussions

Interest, in finance and economics, is payment from a borrower or deposit-taking financial institution to a lender or depositor of an amount above repayment of the principal sum (that is, the amount borrowed), at a particular rate. It is distinct from a fee which the borrower may pay the lender or some third party. It is also distinct from dividend which is paid by a company to its shareholders (owners) from its profit or reserve, but not at a particular rate decided beforehand, rather on a pro rata basis as a share in the reward gained by risk taking entrepreneurs when the revenue earned exceeds the total costs.For example, a customer would usually pay interest to borrow from a bank, so they pay the bank an amount which is more than the amount they borrowed; or a customer may earn interest on their savings, and so they may withdraw more than they originally deposited. In the case of savings, the customer is the lender, and the bank plays the role of the borrower.
Interest differs from profit, in that interest is received by a lender, whereas profit is received by the owner of an asset, investment or enterprise. (Interest may be part or the whole of the profit on an investment, but the two concepts are distinct from each other from an accounting perspective.)
The rate of interest is equal to the interest amount paid or received over a particular period divided by the principal sum borrowed or lent (usually expressed as a percentage).
Compound interest means that interest is earned on prior interest in addition to the principal. Due to compounding, the total amount of debt grows exponentially, and its mathematical study led to the discovery of the number e. In practice, interest is most often calculated on a daily, monthly, or yearly basis, and its impact is influenced greatly by its compounding rate.

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  1. chwala

    I The constant value on the given exact differential equation

    My interest is on the highlighted part in red under exact_2 page.
  2. C

    Finding compound interest formula

    For this part (a), I got ##A(t) = 500 \times 6.5^t## where t is in years. Does someone please know whhy their function is to base e? Is it because the money is compounded continuously? Many thanks!
  3. A

    Other Is this a conflict of interest? (reviewing an article)

    A journal sent me an email asking me to be an adjudicator for one article since the two reviewers disagreed on their recommendations. I accepted based on the abstract. When reading the paper I found that (a) The author is citing me, not a big deal I guess. but (b) The author gives a solution...
  4. Mark44

    Interest in post comparing nVidia CUDA code vs. Intel AVX-512 code?

    I've done a bit of CUDA programming lately, to exercise some parallel code on my nVidia graphics card. I also ported implemented the computations in Intel AVX-512 assembly code. The code I wrote takes a bunch (=262,144 = ##2^{18}## to be exact) of points, and calculates the slope and...
  5. H

    KE of photo-electron and nominal interest rate

    Einstein's formula for kinetic energy of a photo electron is $$ KE = h\nu - \phi$$ $$ h\nu = KE + \phi$$ Which basically says whatever energy you provide through radiation, a part of it will be used (but I would like to say 'wasted') in overcoming the work-function (that is in cajoling that...
  6. Frabjous

    Other Declining interest in Physics Today magazine

    I have noticed a declining interest for myself in Physics Today magazine. Am I just getting old and grumpy or is this a more widespread phenomena?
  7. jedishrfu

    For those of us with an iPad and an interest in ML

    The first is Tinkerstellar ($free), an app designed to teach you python 3 and some of its most popular modules including its ML modules (7 part tutorial) like Scikit-Learn and Pandas. It has a run code feature to show how python will execute example code. The second app by the same developer is...
  8. B

    Admissions Including High Energy Theory as a field of interest in my SOP?

    Hi, I'm a current senior in college, and am applying to grad. schools for fall 2022. I'm interested in high energy theory, and I have had some research experience in ads/cft correspondence, kaluza-klein theory, computational particle physics. However, I'm not certain as to which particular topic...
  9. K

    MHB Compound Interest: $50000 Invested for 3 Years at 7.75%

    An alumnus of a local high school donated $50000 to the school. The amount was invested for 3 years at 7.75%, compounded quarterly. The school has agreed to use only the interest earned on the investment to buy sports equipment. How much money will be available for sports equipment at the end of...
  10. nervousring

    Other Book list for a person with lots of interest in Physics?

    I'm sorry if you get this question often. I wish there was a definitive list at the top of Google searches but there wasn't. I want to learn physics from textbooks. I know basics of Trigonometry. I went through a third of Kline's calculus and found it doable and enjoyable. I also tried Spivak...
  11. Eclair_de_XII

    Given price of an annuity and its level payments, find the interest rate

    A 30-year monthly-payment mortgage loan for 300,000 is offered at a nominal rate of 0.072 converted monthly. Thus the monthly effective interest rate is 0.006 and the calculated monthly payment is 2036.36. (Calculate the payment (PMT) on your calculator and leave it there for the moment.) When...
  12. Eclair_de_XII

    Continuously payable annuities with force of interest

    I split the continuous payment stream into two separate streams: 1. one 10-year payment stream with a rate of 1000 per year 2. one 4-year payment stream with a rate of 1000 pewr year I expressed the present value of this payment stream as: ##\begin{align}...
  13. H

    How to calculate the monthly interest rate?

    First, I'm not sure if this is the right forum to post this question. It's not a homework problem or any assignment. Just doing this as an exercise. Ill just post it here just in case. I’m trying to write a c++ program to calculate the monthly interest rate 'i' given the loan amount 'P' ...
  14. T

    Studying How Can Academic Counseling Help with My Interest in Studying Mathematics?

    Hello there.I have a problem about interest studying mathematics.Generally I think I probably have interest in all of math but I do not know if I study a topic for example if it will be interesting to others or if I try to make questions on that topic or connect different topics on that question...
  15. AN630078

    Geometric Sequence to solve an Interest Problem

    To find how much would be in the account after ten years, let the balance in the account at the start of year n be bn. Then b1=2000 I believe that this a compound interest problem. Common ratio r = 1.06 bn =2000*1.06^n−1 Thus, b10 =2000×1.06^9 = £3378.95791 The balance of the account at the...
  16. B

    Compound Interest: 3.11% Annually, 3x/Year

    1. 350*(1+(0.0311)/3)*ln(1+(0.0311)/3) 2 and 3. Not sure how to answer these questions.
  17. N

    Other How do I regain my interest in Physics?

    Summary:: Loved Physics... decided in 7th that I wanted to become a cosmologist ( still do )... 2 yrs back when 11th Grade started, grades dropped in fav subs ( Math & Phy )… felt like I was failing in them and grades dropped further... parents helped and was able to recover Maths to as good as...
  18. S

    MHB Interest Cost for Reza D. ($686.25 @ 18¾% p.a.)

    .A certain credit card company charges interest at 18¾% p.a. Reza D. had an outstanding balance of $686.25 on his credit card for 35 days, at which time he paid everything that he owed to the company. How much interest did Reza have to pay, and how much did he pay in total?
  19. Grinkle

    Interest rate cut vs health policy - how are they consistent?

    Cutting interest rates is intended to change people's behavior in favor of economic growth driving activity. In the main this necessarily involves an increased amount of leaving ones home and going to work. The novel CV itself is not impacting the economy - it is the various policies to combat...
  20. Benjamin_harsh

    Problem regarding simple interest

    7yr=100% interest 21yr=300% interest Amount=(100+300)%=400%=4 times of principal How 7 years is equal to 100% interest? Why in last step, we added 100% & 300%?
  21. Benjamin_harsh

    Finding the Simple Interest for a specific year

    P = 49000; R = 57 1/7%; T = 4 yrs; SI of 2nd year = ? R = 57 1/7% i.e 4/7. i.e Interest/Principle. Principle; 7 corresponds to 49000. After this how to proceed?
  22. B

    What Fictional Alien Concepts interest You the Most?

    For me it is their behavior. How it is different from humanity. Some will seek to answer the why, but I am only interested in their ongoing goals. To a large degree that fits their behavior, since in my work, each fictional race I tailor made for a specific purpose which drives them to do what...
  23. P

    Admissions Including multiple areas of interest in my SoP for PhD Applications

    I'm starting to write my statement of purpose for Physics and Astronomy graduate schools, but I'm not yet dead set on which field I want to specialize in. Considering this, is it ok for me to write something along the lines of, "I want to either do field 1 with professor I or do field 2 with...
  24. C

    Courses Graduate level Mathematics courses of interest for Biological Physics

    I am an incoming graduate student in Theoretical Physics at Universiteit Utrecht, and I struggle to make a choice for one of my mathematical electives. I hope someone can help me out. My main interests lie in the fields of Statistical Physics, phase transitions and collective and critical...
  25. M

    Frustrations with the general populace's lack of interest in science

    I have personally always had an interest in "how things work" from an early age. It seems to me to be our responsibility as such to have a basic understanding on how the world around us functions, came to be, and what causes things to be the way they are. I struggle to truly comprehend how so...
  26. P

    Finance loan interest rate homework

    I got 6.33% but apparently it's 3.2%
  27. Charles Link

    A magnetostatics problem of interest 2

    A very important problem in magnetostatics is the uniformly magnetized cylinder of finite length. Permanent cylindrical magnets can be modeled as having approximately uniform magnetization, and it is of much interest, given such a uniformly magnetized cylinder, to be able to calculate the...
  28. F

    B Any interest in a spacetime diagram generator?

    Hi, I've written a script-based spacetime diagram generator. I have no idea if it has any value for anyone besides myself—you may have access to better tools than I do. When I looked for spacetime generators, I only found some very limited web tools and one downloadable program that wasn't much...
  29. Bobman

    What sparked your interest for physics?

    For me it was something as trivial as a conceptual example of Newtons third law, the astronaut creating momentum by tossing a wrench, that gave me an eyeopener for the subject. What ignited your spark?
  30. B

    MHB Given amount and interest rate, find principal

    Homework help please: If I want to have $60,000 in 8 years, how much would I need to deposit in the bank today if the account pays an interest rate of 9%?
  31. opus

    B Question about Compound Interest Formula

    If I have an investment, that is compounded at some rate ##r##, ##n## times per year, it can be written as a function as such: $$A(t)=P\left(1+\frac{r}{n}\right)^{nt}$$ My question is in regards to the 1 here. I think I have a general idea of what it's for, but I can't really put it into...
  32. S

    Programs Broad Interest and Environmental Focus

    Hello! I am returning to school but have, unfortunately, not decided what my end goal is. I originally enrolled in mechanical engineering, and dropped out to pursue a marijuana pipe dream that was unfulfilling. Now, at 19 YO going on 20, I am re-enrolled in community college to fix my GPA and...
  33. R

    Interest of IQ (QAM) processing at receiver level

    Hello. My question is about a specific case. Assume emitted signal ihas not been created using IQ modulation, what is the interest to rebuild an IQ signal in receiver before port-processing ?
  34. Eclair_de_XII

    How to calculate total interest from annuity-immediate?

    Homework Statement "A loan of 10,000 is repaid by twenty level installments at the end of every six months. The nominal interest rate is 8%, convertible half-yearly. Find the total amount of interest payment made over the ten-year period." Homework EquationsThe Attempt at a Solution...
  35. N

    MHB Carl Sontag's Interest & Discount Note Comparison

    Carl Sontag wanted to compare what proceeds he would receive with a simple interest note versus a simple discount note. Both had the same terms: $19,500 at 8 % for 2 years. Use ordinary interest as needed. A. Calculate the simple interest note proceeds. B. Calculate the simple discount note...
  36. M

    MHB Effective Rate of Interest

    A $17,000 T-bill is purchased at a 2.75% discount rate for 20 weeks. Find the effective rate of interest to the nearest hundredth of a percent. My Effort: Note: 20 weeks = 20/52 or 5/13 of a year. Let E = effective rate of interest E = [1 + (r/m)]^m - 1 where r is the nominal (annual )...
  37. P

    Maintaining interest in the new 'private' space race

    It's said that expectations drive the economy. So, how do you maintain interest in something that has no immediate bearing/benefit/utility of a population? I would think the answer to that question is to manifest a 'goal', in this case being an interplanetary species or even just building a...
  38. ISamson

    EE PF Projects Contests Interest

    Hello. I would be interested in conducting some EE DIY project contests on PF. Arduino and such. Some examples could be on arduino.cc and hackster.io. This thread is for me to get the numbers of users interested, so I could decide if to proceed with the idea or not. Thanks.
  39. D

    MHB Gathering interest in Dynamical Systems (Bifurcation, Stable Manifolds, Hamiltonian Systems) f

    I am in the process of writing a lecture out for my Graduate modeling class I teach. I normally don't write lectures out in LaTex or use PDF's because I write on the dry erase board, but if anyone is interested I wouldn't mind spending the time to type out some notes on the topic. The topic...
  40. Z

    Simple Interest: Number of Years

    Homework Statement An investment is made at 12.5% annual simple interest. Find the number of years it will take for the cumulative value of the interest to equal the original investment? Homework Equations V=P(1+rt) Where V= interest on Amount P = Principal amount r= interest rate t= number...
  41. L

    Calculating Simple Interest Rate on a $2,000 Savings Account

    Homework Statement Dylan received an academic achievement prize of $2,000 from his college. He deposited this money into a savings account on July 15, 2016. If the interest accumulated on the investment when he withdraws the money on March 29, 2017 was $73.93, calculate the annual rate of...
  42. L

    Simple Interest help -- investment in his savings account matured to $4,106.32

    Homework Statement Michael's investment in his savings account matured to $4,106.32 at the end of 165 days. If the account was earning simple interest at a rate of 4.80% p.a., answer the following. a. What was Michael's initial investment? Round to the nearest cent b. How much interest did...
  43. L

    Simple Interest Calculator for a 5% Rate - Help with Homework Statement

    Homework Statement Karl invested his savings in a short-term fund that was offering a simple interest rate of 5% p.a. The maturity value of the investment at the end of 300 days was $29,152.08. a. Calculate the principal amount invested. Round to the nearest cent b. Calculate the interest...
  44. Z

    Compound Interest Homework: Amy vs Bob

    Homework Statement Amy deposited $1000 into an account that earns 8% annual interest compounded every 6 months. Bod deposited $1000 into an account that earns 8% annual interest compounded quarterly. If neither Amy nor Bob makes any additional deposits or withdrawals in 6 months, how much more...
  45. karush

    MHB F.6.1 - Interest Rate Fundamentals

    $6–1$ Interest rate fundamentals: The real rate of return Carl Foster,atrainee at an investment banking firm, is trying to get an idea of what real rate of return investors are expecting in today’s marketplace. He has looked up the rate paid on $3-$month U.S.Treasury bills and found it to be...
  46. M

    MHB Optimizing Loan Interest Rates: Solving for Loan Length

    The problem: Lending companies often offer better rates when you borrow a larger sum of money for a shorter period of time. A borrower is offered a loan of \$10,080 at 10% and a loan of \$7000 at 12%. If the larger loan is 6 mo shorter but the total interest payed is the same, find the length of...
  47. Shakattack12

    Calculating Interest Rates for Loan of $735,000

    Homework Statement The problem ask to calculate the interest rate of a loan. The principal is $735 000, term is 25 years (300 months), and the repayments due is $4656.17/month. i = interest rate, PV = present value, R = repayments Homework Equations PV = R x [(1+i/12)^300 - 1]/(i/12) The...
  48. Z

    Simple Interest for two investments

    Homework Statement Pat invested a total of 3000$. Part of the money was invested in a money market account that paid 10 percent simple annual interest, and the remainder of the money was invested in a fund that paid 8 percent simple annual interest. If the interest earned at the end of first...
  49. F

    Programs Is a Computer Science Background Enough for an MS in Astrophysics?

    Looking for thoughts. I have recently gained an interest in Astrophysics and have considered going back to school to study the subject. I have a BS in Computer Science, and an MS in Information Technology and I believe my background is close enough to consider an MS program in Physics. However...
  50. S

    Celebrities having an interest in the hard sciences

    And I am not talking about celebrities such as someone like Stephen Hawking, who are famous scientists. I am talking about those that are people you'd never expect having an interest in mathematics, chemistry, physics, etc.