Interest on savings is calculated by multiplying the money amount times the opportunity cost times the annual interest rate.

Question

Quizplus · Accepted Answer

The formula for calculating interest on savings is actually:

interest = principal x rate x time

where principal is the amount of money you are saving, rate is the annual interest rate, and time is the length of time you are saving for. The opportunity cost is not factored into this calculation.

Interest on Savings Is Calculated by Multiplying the Money Amount