Calculator glossary

Definitions of principal, compound interest, marginal tax and amortization.

Principal

The starting amount borrowed or invested, before interest.

Compound interest

Interest calculated on both the principal and previously accumulated interest.

Amortization

The period used to repay a loan through scheduled principal and interest payments. A mortgage term and its amortization are different periods.

Marginal tax rate

The rate applied to the next dollar of taxable income. It differs from the average rate paid on total income.

Present and future value

Present value discounts a later amount to today. Future value grows an amount using an assumed rate and period.