# 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. ### I The constant value on the given exact differential equation

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

31. ### 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. ### 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. ### 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. ### 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...

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. ### 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. ### 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. ### 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...

44. ### 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. ### 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. ### 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...
49. ### 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.