Answer :
Difference between Simple interest and Compound interest
What is Interest?
The expense of borrowing money, such as the interest added to a loan debt, is known as interest. The rate paid for money on deposit, as in the case of a certificate of deposit, can also be considered interest. Simple interest and compound interest are the two methods for calculating interest.
Simple interest is based on the principal amount, which is the main distinction between it and compound interest. Contrarily, compound interest is calculated using the principle sum and interest that has been compounded over the course of a period.
Simple Interest and Compound Interest Differences:
Simple interest: Simple Interest is the amount repaid for using the borrowed funds over a predetermined amount of time.
Compound Interest: When the total principal amount and the rate of interest for a certain amount of time surpass the due date for payment, this is known as compound interest.
Simple interest: S.I. = (P × T × R) ⁄ 100
Compound Interest: C.I. = P(1+R⁄100)^t − P
Simple interest: When compared to compound interest, the return is significantly smaller.
Compound Interest: The return is much higher.
Simple interest: The principal amount is constant
Compound Interest: Throughout the entire loan duration, the principle amount changes.
Simple interest: The principal amount is what the interest is based on.
Compound Interest: Its principal and accrued interest are covered by the interest that is imposed on it.
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