MANAGEMENT

Detailed explanation-1: -Interest is the price you pay to borrow money or the cost you charge to lend money. Interest is most often reflected as an annual percentage of the amount of a loan. This percentage is known as the interest rate on the loan.

Detailed explanation-2: -Interest payments are the cost of borrowing money. The borrower makes these payments in addition to paying back the principal on a loan. If you lend money with interest, the interest payment is the amount you are paid over and above the principal amount you lent.

Detailed explanation-3: -What are the Different Types of Interest? The three types of interest include simple (regular) interest, accrued interest, and compounding interest.

Detailed explanation-4: -Compound Interest Lenders include that interest amount to the loan balance, and they use that amount when calculating the next year’s interest payments on a loan, or what accountants call “interest on the interest” of a loan or credit account balance.