Interest calculations fall into two categories. Simple interest and compound interest.
- With Simple interest, you work out the interest on the initial amount based on the interest rate and you add that amount each year to the amount you have.
- With Compound interest, the interest is calculated on the amount you currently have that year and aded to your amount.
Here is a short video explaining the 2 types using an example.
The full video lessons on both types of interest are found by following these 2 links.