What Business Administrators and Managers Need to Know about Interest Rates

May 31st, 2011 by Clifford
 It is virtually impossible to get by in today’s modern world without taking out credit. Unfortunately, many people don’t fully understand how credit and interest rates work. Therefore, the creditors end up getting much more out of them than they should be paying. You don’t have to have a degree in business administration to understand interest rates, but it sure helps. Individuals who get a degree in business administration from an accredited college or school will not only be able to make a decent living from the knowledge they gained, but they will also be able to make their money go farther than those who do not understand how business and interest rates work.

One basic skill that can be learned while earning a business degree is how to calculate interest rates. If you know the principal amount, which is the amount borrowed, the interest rate and the time known, calculating the amount of interest you will end up paying is simple. All that has to be done is multiply the principal (P) by the annual interest rate (r), and multiply the product by the time in years (t). The equation for this is I=prt.

It is also helpful to be able to calculate interest on investments. This is a form of interest that is paid to you. The amount of interest you will earn can be calculated through the same formula used to calculate the total amount of interest you pay on money you borrow, I=prt.

Sometimes a monkey wrench gets thrown into the calculations when the numbers provided do not meet specifications. For instance, if the time is not given in years, it becomes necessary to enter a term for the time in years. For example, if the time is 300 days, you can enter the time as 300/365 of a year. If the time is 5 months, it can be entered as 5/12 year.

Using permutations of this formula will allow you to calculate any of the terms. If you want to know the principal but have only the interest, rate and time, the formula P = I/rt can be used. This formula is useful for being able to tell how much money you would have to invest to earn a specific amount in return.

Finally, it is also helpful to be able to determine the interest rate when you know the amount of interest, the time and the principal. The formula for this is r = I/pt.

Are you still with us? Do you think you can be a business administrators and managers? Then US College Search should calculate into the equation. We are on Facebook and Twitter as well. To learn how to get a degree in Business Administration and Management or Business go to US College Search. Then you can “Search For Colleges By State” or go to the Business Administration and Management hub under “Search By Degree.”

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