difference between simple interest and compond interest
Answers
simple interest is based on the amount principle of a loan compound interest is based on principal amount and interest that aculmulate on it every period
When a person borrows money from the money lender or any bank/financial institution, some extra amount is charged by the lending entity for the use of money, called as interest. The interest rate is mutually decided by both the parties. Interest can be charged in two ways, i.e. simple interest and compound interest. The former is the type of interest where the interest is charged only on loaned amount but in the case of the latter interest is calculated on the amount lent plus accumulated interest.
So, simple interest is the sum paid for using the borowed money, for a fixed period. On the other hand, whenever the interest becomes due for payment, it is added to the principal, on which interest for the succeeding period is reckoned, this is known as compound interest. So, here in this article, you will find the basic differences between Simple Interest and Compound Interest, which we have compiled after an in-depth research on the two terms.
Content: Simple Interest Vs Compound Interest
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