interest

interest
The charge made for borrowing a sum of money. The interest rate is the charge made, expressed as a percentage of the total sum loaned, for a stated period of time (usually one year). Thus, a rate of interest of 15% per annum means that for every £100 borrowed for one year, the borrower has to pay a charge of £15, or a charge in proportion for longer or shorter periods. In simple interest, the charge is calculated on the sum loaned only, thus I = Prt, where I is the interest, P is the principal sum, r is the rate of interest, and t is the period. In compound interest, the charge is calculated on the sum loaned plus any interest that has acrued in previous periods. In this case I = P [(1 + r)n – 1], where n is the number of periods for which interest is separately calculated. Thus, if £500 is loaned for two years at a rate of 12% per annum, compounded quarterly, the value of n will be 4 × 2 = 8 and the value of r will be 12/4 = 3%. Thus, I = 500 [(1.03)8 – 1] = £133.38, whereas on a simple-interest basis it would be only £120. These calculations of interest apply equally to deposits that attract income in the form of interest.
In general, rates of interest depend on the money supply, the demand for loans, government policy, the risk of nonrepayment as assessed by the lender, the period of the loan, and relative levels of foreign-exchange rates into other currencies.

Accounting dictionary. 2014.

Игры ⚽ Нужен реферат?
Synonyms:

Look at other dictionaries:

  • interest — in·ter·est / in trəst; in tə rəst, ˌrest/ n [probably alteration of earlier interesse, from Anglo French, from Medieval Latin, from Latin, to be between, make a difference, concern, from inter between, among + esse to be] 1: a right, title, claim …   Law dictionary

  • interest — INTEREST. s. m. Ce qui importe, ce qui convient en quelque maniere que ce soit, ou à l honneur, ou à l utilité, ou à la satisfaction de quelqu un. Interest public, general, commun. interest de famille. interest particulier. interest d honneur.… …   Dictionnaire de l'Académie française

  • Interest — In ter*est, n. [OF. interest, F. int[ e]r[^e]t, fr. L. interest it interests, is of interest, fr. interesse to be between, to be difference, to be importance; inter between + esse to be; cf. LL. interesse usury. See {Essence}.] [1913 Webster] 1.… …   The Collaborative International Dictionary of English

  • Interest —     Interest     † Catholic Encyclopedia ► Interest     Notion of interest     Interest is a value exacted or promised over and above the restitution of a borrowed capital.     ♦ Moratory interest, that is interest due as an indemnity or a… …   Catholic encyclopedia

  • interest — Interest, Versura, B. Prendre à interest, Versuram facere, B. ex Cic. Argent prins à interest, ou perte de finance, Circunforaneum aes. Tu y as interest, Ad te attinent, et tua refert. Il n y a point d interest, Non interest quid faciat morbum,… …   Thresor de la langue françoyse

  • interest — [in′trist, in′trəst, in′tər ist; ] also, esp. for v. [, in′tər est΄, in′trest΄] n. [ME interesse < ML usury, compensation (in L, to be between, be different, interest < inter , between + esse, to be: see IS1): altered, infl. by OFr interest …   English World dictionary

  • Interest — In ter*est, v. t. [imp. & p. p. {Interested}; p. pr. & vb. n. {Interesting}.] [From interess d, p. p. of the older form interess, fr. F. int[ e]resser, L. interesse. See {Interest}, n.] [1913 Webster] 1. To engage the attention of; to awaken… …   The Collaborative International Dictionary of English

  • interest — [n1] attraction, curiosity absorption, activity, affection, attentiveness, care, case, concern, concernment, consequence, diversion, engrossment, enthusiasm, excitement, game, hobby, importance, interestedness, into, leisure activity, matter,… …   New thesaurus

  • interest — ► NOUN 1) the state of wanting to know about something or someone. 2) the quality of exciting curiosity or holding the attention. 3) a subject about which one is concerned or enthusiastic. 4) money paid for the use of money lent. 5) a person s… …   English terms dictionary

  • Interest —   Interest is the charge or cost for using money; expressed as a rate per period, usually one year, called interest rate.   The reward for making funds available to a third party over a period of time, usually pre arranged …   International financial encyclopaedia

  • interest — is now normally pronounced in trist or in trest, with the first e unpronounced. The same applies to the derivative words interested, interesting, etc …   Modern English usage

Share the article and excerpts

Direct link
Do a right-click on the link above
and select “Copy Link”