# 5.17: Solve Real World Problems Involving Simple Interest

Difficulty Level: Basic Created by: CK-12
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### Vocabulary Language: English

TermDefinition
Compound interest Compound interest refers to interest earned on the total amount at the time it is compounded, including previously earned interest.
future value In the context of earning interest, future value stands for the amount in the account at some future time $t$.
Interest Interest is a percentage of lent or borrowed money. Interest is calculated and accrued regularly at a specified rate.
present value In the context of earning interest, present value stands for the amount in the account at time 0.
Principal The principal is the amount of the original loan or original deposit.
Rate The rate is the percentage at which interest accrues.
Simple Interest Simple interest is interest calculated on the original principal only. It is calculated by finding the product of the the principal, the rate, and the time.

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