PV = present value

i = interest rate

n = number of compounding periods

Simple interest is a quick method of calculating the interest charge on a loan. Simple interest is determined by multiplying the daily interest rate by the principal by the number of days that elapse between payments.

Enter present value

Enter interest rate

Enter number of compounding period

The interest rate is 5% per year. We deposited 10,000 Euros into the bank. We withdraw the interest from the deposit each time. We do this for 5 years.

So, we substitute the values into the formula

BH = 10000 * (0.05 * 5),

BH = 12500

After 5 years, we have saved 12,500 Euros including the principal (assuming we withdrew the interest).

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