ABSTRACT
This chapter discusses calculations and formulas used in business, financial management, and accounting. It also develops a set of fundamental routines that use the math unit to solve common formulas in these fields. Interest is the money paid for the use of money. In other words, if borrowing is the renting money, then interest is the rent. The amount borrowed is called the principal and the interest is a percentage of this principal. There are several formulas for calculating interest. In simple interest the calculation is a simple product of the principal, times the interest rate, times the term in years. In simple interest the charge or fee is based on the principal amount only and is computed once in the term of the loan. Simple interest is often used in management calculations, but in practice most loans or deferred payment agreements are based on a more reasonable model, called compound interest.
