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Investments and loans base their interest calculations on of two possible methods: the interest and the interest methods. Both methods apply three variables - the
Investments and loans base their interest calculations on of two possible methods: the
interest and the
interest methods. Both methods apply three variablesthe amount of principal, the interest rate, and the investment or deposit periodto the
amount deposited or invested in order to compute the amount of interest. However, the two methods differ in their relationship between the variables.
Assume that the variables and PV represent the interest rate, investment or deposit period, and present value of the amount deposited or
invested, respectively.
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