Q:

# How Do You Calculate Interest?

A:

To calculate interest, multiply the periodic interest rate by the principle amount. For example, if you borrowed \$1000 with an interest rate of 10 percent, in a year your interest paid is \$100.

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Find your interest rate in your financial records for the product for which you are calculating interest.

2. Multiply the interest rate by the principle amount

For example: \$1000 in principle times 0.1 (10 percent periodic interest rate) equals \$100.

Once you determine the amount of interest, check with your bank or other institution to confirm that your rate does not vary.

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