Simple and Compound Interest

• Lender or creditor

  • person (or institution) who invest the money or makes the funds available.
• Borrower or debtor

  • person (or institution) who owes the money or avails of the funds from the lender.
• Origin or loan date - date on which money received by the borrower.
• Repayment date or maturity date - date on which the money borrowed, or loan is to be completely repaid.
• Time or term (t) - amount of time in years the money is borrowed or invested; length of time between the origin and maturity dates.
• Principal (P) - amount of money borrowed or invested on the origin date.
• Rate (r) - annual rate, usually in percent, charged by the lender, or rate of increase of the investment.
• Interest (I) - amount paid or earned for the use of money.
• Simple Interest (Is) - interest that is computed on the principal and then added to it.
• Compound Interest (Ic) - interest is computed on the principal and also on the accumalated past interest.
• Maturity value or future value (F) - amount after (t) years that the lender receives from the borrower on the maturity date
• Maturity value or future value (F) - amount after (t) years that the lender receives from the borrower on the maturity date