Question

How much total interest do you pay on your debts

Answer 1

To calculate total interest on debt, use the formula: Total Interest = Principal × Interest Rate × Time. For compound interest, use the extended formula incorporating compounding periods.

To calculate the total interest on debt, you can use the following formula:

`\[ \text{Total Interest} = \text{Principal} * \text{Interest Rate} * \text{Time} \]`

Where:

- Principal is the initial amount of debt borrowed.

- Interest Rate is the annual interest rate (expressed as a decimal).

- Time is the time the debt is held or the loan term, usually expressed in years.

This formula assumes simple interest. If your debt has compound interest, the calculation becomes more complex and involves compounding periods. In such cases, the formula would be:

`\[ \text{Total Interest} = \text{Principal} * \left(1 + \frac{\text{Interest Rate}}{\text{Compounding Periods}}\right)^{\text{Compounding Periods} * \text{Time}} - \text{Principal} \]`

Here, Compounding Periods represent how often interest is compounded per year. For loans with simple interest, Compounding Periods is typically 1.

The complete question is:

How do you calculate total interest on debt?