A financial agreement under which a bank or other lender agrees to provide a client with loans of money up to an approved limit during a predefined period. The client may borrow the entire credit amount all at once or in portions during the specified period.
The money originally invested or loaned, on which basic interest and returns are calculated.
Linear equations can be used to solve many practical and technical problems. Such an equation may include many variables so long as all are of the first order, and the value of any one variable can be calculated if the values of all the other variables are known.
For example, one can use a linear equation to determine the amount of interest accrued on a home equity line of credit after a given amount of time. Consider the hypothetical situation in which you need money to make home improvements and can open a $20,000 credit line at an interest rate of 2.5% per year. You plan to pay off the debt in its entirety within 15 months. To find out how much it will cost you can use following formula:
$I=P\cdot r \cdot T$
Where I is interest, p is the principal amount loaned ($20,000), r is the interest rate (2%, or 0.02) per year, and T is the number of years elapsed (15 months will be 1.25 years).
Plugging the known values into the above formula, we can determine that you will pay $500 in interest.
There are many other common formulas that can be used for everyday computations. Some have more variables than others, but none has a variable of order higher than one. Let's take a few examples of other linear equations, namely velocity, gratuity (tip), and cost of purchased goods:
The formula relating velocity (V), distance (d), and time (T).
The formula relating gratuity (G), cost (c), and desired percent gratuity (r, expressed as a decimal).
$A\cdot x+B\cdot y+C\cdot z+...=T$
Where A, B and C represent the quantities of goods that cost x, y and z, respectively. This could be expanded or contracted relative to the number of different items purchased. T represents the total cost of goods purchased.