# Shared Flashcard Set

## Details

Engineering Economy (Quiz #1)
Interest
7
Engineering
01/30/2012

Term
 Interest is...
Definition
 The manifestation of the time value of money.
Term
 Interest is...
Definition
 Rent for money borrowed.
Term
 Interest is...
Definition
 Earned when a person or organization saves, invests or lends money & obtains a return of a larger amount.
Term
 Formula for Interest
Definition
 (End amount) - (Original Amount) as a Percent(%)
Term
 Formula for Interest Rate or Rate of ReturnorReturn on Investment
Definition
 [(Interest accrued per time unit)/(Original Amount)] * 100%
Term
 An employee @ Laserkinetics can borrow \$10,000 on May 1st & must repay a total of \$10,700 exactly 1 yr later. Determine the interest amount and the interest rate paid.
Definition
 (\$10,700) - (\$10,000) = \$700Manipulating the equation...% = (\$700)/(\$10,000)
Term
 Calculate the amount deposited 1yr ago to have \$1000 now @ an interest rate of 5%. Also calculate the amount of interest earned during this time period.
Definition
 \$1000 = x + x(0.05) = x(1 +0.05) = 1.05xx = (1000)/(1.05) = 952.38I = \$1000 - 952.38
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