That's the interest rate.

That's not bright enough.

100 interest.

So principal amortization just means, well, if I just keep paying this mortgage, after how long is the entire principal amount not just interest, how long is the entire principal amount going to be paid off in?

loans to this bank.

Year nine, I pay 100,000.

Principal

You have no loan left over.

Which is essentially you take the original amount you borrowed, the interest rate, the amount, the fee that you pay every year is the interest rate times that original amount, and you just incrementally pay that every year.

In a traditional mortgage, you actually, your payment has some part interest and some part principal.

Metals

Details

megawatts

escudos

pesetas

reals

Why were they willing to pay rent, when they could have bought a house, where the mortgage would have been interest plus a little principal it would have been no more than 400 a month?

So this is after one year.

So it's still a 50 interest rate for the six months, but your principal has increased, right?

Right?

Non metals

Non Metals

So now, in this situation. we are compounding the interest.

I also want 100 of that.

And this notion which I just did here, this is actually called simple interest.

Is the metal alive and well?

We borrowed money at high interest.

This is actually the power of compounding interest.

A lot of people, you know, when you hear 10 interest rate or even a 25 interest rate, that no one really makes a big deal about it.

If we were farmers, we'd be eating our seed.

That's 100 , right?

There's that nice fancy vault that Sal has, and he gives interest on it.

We all have heard of it.

is if you take that money back to the store.

That's by taking that money back.

In the last situation we just kept adding 10 of the original 100.

So the for profit sector can pay people profits in order to attract their capital for their new ideas, but you can't pay profits in a nonprofit sector, so the for profit sector has a lock on the multi trillion dollar capital markets, and the nonprofit sector is starved for growth and risk and idea capital.

And over time, the interest component becomes less, and the principal becomes more.

Remember, this is the annual interest rate but this is an overnight loan.

That equals my final payment or how much I owe once all the interest and the principal has compounded.

And the original amount that I borrowed in fancy banker or finance terminology is just called principal.

We borrowed money at high interest.

Reserves are like savings accounts.

So once again, we can use the same formula.

Before Interest and Taxes.