Question

Difference between simple interest and compound interest with supporting example​

Answer 1

Answer:

SI of 1000 at 10% per annum

1st Year = 1000 x 10/100 = 100

2nd Year = 1000 x 10/100 = 100.

3rd Year = 1000 x 10/100 = 100

In short, In simple interest, the principal always remain the same. The interest are not added to the principal.

Compund Interest of 1000 at 10% per annum

1st Year = 1000 x 10/100 = 100

2nd Year = 1100 x 10/100 = 110

3rd Year = 1210 x 10/100 = 121.

This shows that, in compound interest, the interest are added to to principal. So the principal keeps on increasing so as the interest.

Hope This Helps.