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What is Annual Interest?
Annual interest refers to the amount of interest that is earned or charged on a financial investment or loan over the course of one year. It is a critical component in understanding the return on investment (ROI) for savings accounts, certificates of deposit (CDs), bonds, and loans. In simple terms, annual interest is the cost of borrowing money or the return on saving money, expressed as a percentage of the principal amount. This percentage is known as the annual interest rate, which varies depending on the type of financial product and market conditions. By calculating the annual interest, individuals and businesses can make informed decisions about their financial investments and borrowing options.
