Please can anyone tell me how to calculate the interest on £695 @ 8% over 12 months
Many thanks in advance

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Originally Posted by mahtal

Please can anyone tell me how to calculate the interest on £695 @ 8% over 12 months
many thanks in advance

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If the interest is computed @ 8% per annum (year)

695 x .08 =

Consider this answer in comparison to others you receive.

The interest could be different depending on the term of the financial asset.

I don't know what exactly you are talking about but if it's any form of debt/credit then read the contractual terms and it will give you a great detail of how interest is added and even gives you an example that shows you the way it's calculated.

If you just want to know how much is the interest on 695 then the previous poster explained it clearly. If there's any form of compounding then it will be different. Here's how you calculate it in case you want to do it yourself (because we don't really know the terms).

Effective Annual Rate (EAR) = ( 1 + interest rate ) ^time - 1

For example in your case you divide 8% by 12 so you get the monthly interest rate. Then you add that to 1 and power it by 12 months. So here it is:

0.08 / 12 = 0.00667

(1.00667)^12 = 1.083 - 1 = 0.0830

So EAR would be 8.30% if interest is monthly compounded and you make no payments within the year.

Hope this helps.

Quote:

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Originally Posted by mahtal

Please can anyone tell me how to calculate the interest on £695 @ 8% over 12 months
many thanks in advance

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For simple interest (no compounding) = Principal * Rate * Time (years)

in this example: 695 * 8% * 1 = 55.60

if there is compounding: 695(1+.08/12)^(1*12)-695= 57.68