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Introduction to Simple and Compound Interest

Learn more about simple and compound interest and how they are calculated with this free online accounting course.

Publisher: Khan Academy
In this free online accounting course, you will learn how simple and compound interest works, how they are used in daily life, and how simple interest and compound interest are calculated. Any person with a bank account, credit card, or bank loan will come across aspects of simple interest and compound interest. However, many people have difficulty distinguishing between the two types of interest and understanding how they should be calculated.
Introduction to Simple and Compound Interest
  • Duration

    1.5-3 Hours
  • Students

  • Accreditation


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Interest is money paid regularly at a particular rate for borrowed money, or for delaying the repayment of a debt. It can also be looked at as rent on money borrowed. This course will first discuss simple and compound interest and teach you how they are calculated. You will study the principal which is the amount of money initially borrowed. You will also learn about the natural log of 10 which is equal to 2.302585.

Compound interest is interest calculated on the initial principal, which also includes all of the accumulated interest of previous periods of a deposit or loan. It is a little more complicated than simple interest but this course explains the concept clearly and covers the methods used for calculating compound interest. You will learn that by incorporating the principal amount, interest rate, time factor, and compound periods, it will give you the amount of compounded interest.

Interest is essentially a rental or leasing charge levied on the borrower for the use of an asset. For loans, the interest rate is applied to the principal, which is the amount of the loan. By the end of this course, you will fully understand two crucial forms of interest, which will make your financial decisions much easier. This is powerful knowledge, so check out the course today and learn something really useful.

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