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## A History of Interest Rates

**Summary:**Interest rates on money may seem like a recent phenomenon, but the formula for calculating interest(principal x rate x time) dates back to Mesopotamian times of 2 to 3 centuries B.C.

Interest is the fee you must pay in order to use things like money and credit. Interest is found using a formula P x R x T = I. In the formula the P stands for the principal, the R stands for the rate, the T stands for the time, and the I stands for interest. There are two major types of interest that exist today, simple interest, and compounding interest. You calculate simple interest by multiplying the rate by the principal and then multiplying it by the time. Compounding interest is the same thing except for the fact that you are adding the interest on top of the principal over a time.

Interest has been around for thousands of years. The earliest evidence says that it was as a practice used in Mesopotamian Banking and practiced by Greek financiers around 3000 B.C. and 2000 B.C...

This section contains 455 words(approx. 2 pages at 300 words per page) |