Simple Interest (FLAT RATE) , Future Value and Present Value

In financial studies, simple interest (also known as FLAT RATE) is the easiest to calculate. It is just "interest times principal".

Example (1)

Paying $100 now, simple interest charged 10%, after 3 years, how much is the value?

i= 10%
n= 3 years

FV₃ = 100[1+3(0.1)]
= 130


Car Loan is normally using this method.

Example (2) :

Car loan $ 60, 000, 5 yrs to pay back, interest charged is 4% p.a.

FV₅= 60,000 [1+ 5 (0.04)]
= 60, 000 x 1.2
= 72, 000

It means at the end, you have to pay $ 72K and monthly installment will be
$72k / (5x12) = $1200


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FV = Future Value
PV = Present Value

n = Number of period
i = interest
p.a. = per annum, per year