Calculating Interest and DIRT (Junior Cert Business Studies): Flashcards
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Practise the cards
14 cards from this deck
Interest
Interest
Reward for saving money in a bank account
Balance
Balance
Total amount of money in account at a given time
Simple interest
Simple interest
Interest on original deposit only, same amount each year
Simple interest formula
Simple interest formula
Original amount × (interest rate/100)
Compound interest
Compound interest
Interest on total balance including previous interest, grows each year
Compound interest formula
Compound interest formula
Balance at start of year × (interest rate/100)
AER
AER
Annual Equivalent Rate (for compound interest)
CAR
CAR
Compound Annual Return (for compound interest)
Fixed interest rates
Fixed interest rates
Rates that stay the same for a set period
Variable interest rates
Variable interest rates
Rates that can increase or decrease over time
Benefit of fixed rates
Benefit of fixed rates
Certainty and predictable returns
Benefit of variable rates
Benefit of variable rates
Flexibility to move money to better rates
DIRT
DIRT
Deposit Interest Retention Tax
How DIRT is applied
How DIRT is applied
Deducted automatically from interest before you receive it