Key Terms for Chapter 10: Simple Interest

Question	Answer
Adjusted Balance	Balance after partial payment less interest is subtracted from the principal
Banker's Rule	The use of the ordinary interest method
Exact Interest	Used by the Federal Reserve banks and the federal government. Uses a 365 day year
Interest	The cost of borrowing money I=PxRxT
Maturity Value	Amount due on the due date MV=P+I
Ordinary Interest	Uses a 360 day calendar (Used by banks)
Principal	Amount of money that is originally borrowed, loaned, or deposited
Simple Interest	The cost of the loan, usually for 1 year or less
Simple Interest Formula	I=PxRxT
Time	Used to calculate simple interest, and expressed as years or fractional years
US Rule	Method that allows the borrower to receive proper interest credits when paying off a loan in more than one payment before maturity date

Resource summary

	Created by Kyra Louthan 13 days ago