What is the difference between the return rate and the interest rate?

The difference between the rate of return and the interest rate is based on the nature of income from investment and interest paid on the loan. The return rate concerns a value that shows how much revenue is generated on the basis of an initial investment, also called capital. This rate is expressed as a percentage and is based on capital and annual yield, which is the amount obtained during the year. The interest rate, on the other hand, is based on additional parts paid from the loan, which are not part of the actual repayment of the loan. The return on investment is the percentage of loss or profit -generated investment. This value is based on an initial investment or capital and the amount obtained in a certain period, such as one year for the annual return rate.

The return rate can be calculated by deducting capital from the return and then by distributing this value by capital to determine the degree. For example, for investing $ 100 (USD) and return of $ 120, capital is first deducted from the return to determine the growth of $ 20. This throwThe note is then divided by capital for a return on 0.20 or 20%, indicating the return on this investment for one year.

The interest rate indicates the above interest level, which must be paid from the loan. It has nothing to do with any profit or loss of investment. When someone takes a loan, he is usually presented to him an annual interest rate on this loan, which means the payment except the actual principal that must be paid.

The interest rate on the loan can be determined by distributing the interest amount paid from the loan for one year by the value of the valuable amount of the loan or principal. For example, someone who takes a $ 100 loan and pays another $ 25 USD for a year in which it is returned would be divided that 25 per 100. This would provide an interest rate of 0.25 or 25%. While the return rate and interest rate are expressed as percentages, the return rate is based on investment, while interest is paid from the loan.