Answer:
Step-by-step explanation:
At the end of the loan/investment, you can take the accumulated value and subtract that from the principle/PV to get the total interest
The total interest earned can be determined by subtracting the principal from the future value of the loan.
There are two types of interests : simple interest and compound interest.
Compound interest is a type of interest in which the principal and interest already accumulated also earn an interest. While for simple interest it is only the principal that earns interest.
For example, if a loan of $4000 earns 10% interest compounded yearly, the future value of the the amount in 5 years is:
$4000 x (1.1)^5 = 6442.04
The interest earned over the 5 years can be determined by subtracting the cost of the loan from the future value of the investment
Interest = 6442.04 - $4000 = $2442.04
Another example, if a loan of $4000 earns 10% simple interest, the interest of the loan after 5 years is:
$4000 x 0.1 x 5 = $2000
To learn more about interest, please check: brainly.com/question/9352088?referrer=searchResults
