Difference in compound interest and simple interest formula
Answers
Answer:
simple in interest formula = p× r × t ÷ 100
cp = a- p
Answer:
Full SiteNavigation
Difference of Compound Interest and Simple Interest
We will discuss here how to find the difference of compound interest and simple interest.
If the rate of interest per annum is the same under both simple interest and compound interest then for 2 years, compound interest (CI) - simple interest (SI) = Simple interest for 1 year on “Simple interest for one year”.
Compound interest for 2 years – simple interest for two years
= P{(1 + r100" role="presentation" style="display: inline; font-style: normal; font-weight: normal; line-height: normal; font-size: 15px; text-indent: 0px; text-align: left; text-transform: none; letter-spacing: normal; word-spacing: normal; overflow-wrap: normal; white-space: nowrap; float: none; direction: ltr; max-width: none; max-height: none; min-width: 0px; min-height: 0px; border: 0px; padding: 0px; margin: 0px; position: relative;">r100r100)2" role="presentation" style="display: inline; font-style: normal; font-weight: normal; line-height: normal; font-size: 15px; text-indent: 0px; text-align: left; text-transform: none; letter-spacing: normal; word-spacing: normal; overflow-wrap: normal; white-space: nowrap; float: none; direction: ltr; max-width: none; max-height: none; min-width: 0px; min-height: 0px; border: 0px; padding: 0px; margin: 0px; position: relative;">22 - 1} - P×r×2100" role="presentation" style="display: inline; font-style: normal; font-weight: normal; line-height: normal; font-size: 15px; text-indent: 0px; text-align: left; text-transform: none; letter-spacing: normal; word-spacing: normal; overflow-wrap: normal; white-space: nowrap; float: none; direction: ltr; max-width: none; max-height: none; min-width: 0px; min-height: 0px; border: 0px; padding: 0px; margin: 0px; position: relative;">P×r×2100P×r×2100
= P × r100" role="presentation" style="display: inline; font-style: normal; font-weight: normal; line-height: normal; font-size: 15px; text-indent: 0px; text-align: left; text-transform: none; letter-spacing: normal; word-spacing: normal; overflow-wrap: normal; white-space: nowrap; float: none; direction: ltr; max-width: none; max-height: none; min-width: 0px; min-height: 0px; border: 0px; padding: 0px; margin: 0px; position: relative;">r100r100 × r100" role="presentation" style="display: inline; font-style: normal; font-weight: normal; line-height: normal; font-size: 15px; text-indent: 0px; text-align: left; text-transform: none; letter-spacing: normal; word-spacing: normal; overflow-wrap: normal; white-space: nowrap; float: none; direction: ltr; max-width: none; max-height: none; min-width: 0px; min-height: 0px; border: 0px; padding: 0px; margin: 0px; position: relative;">r100r100
= (P×r100)×r×1100" role="presentation" style="display: inline; font-style: normal; font-weight: normal; line-height: normal; font-size: 15px; text-indent: 0px; text-align: left; text-transform: none; letter-spacing: normal; word-spacing: normal; overflow-wrap: normal; white-space: nowrap; float: none; direction: ltr; max-width: none; max-height: none; min-width: 0px; min-height: 0px; border: 0px; padding: 0px; margin: 0px; position: relative;">(P×r100)×r×1100(P×r100)×r×1100
= Simple interest for 1 year on “Simple interest for 1 year”.
Solve examples on difference of compound interest and simple interest:
1. Find the difference of the compound interest and simple interest on $ 15,000 at the same interest rate of 1212" role="presentation" style="display: inline; font-style: normal; font-weight: normal; line-height: normal; font-size: 15px; text-indent: 0px; text-align: left; text-transform: none; letter-spacing: normal; word-spacing: normal; overflow-wrap: normal; white-space: nowrap; float: none; direction: ltr; max-width: none; max-height: none; min-width: 0px; min-height: 0px; border: 0px; padding: 0px; margin: 0px; position: relative;">1212 % per annum for 2 years.
Solution:
In case of Simple Interest:
Here,
P = principal amount (the initial amount) = $ 15,000
12.5 % per annum
Number of years the amount is deposited or borrowed for (t) = 2 year
Using the simple interest formula, we have that
Interest = P×r×2100" role="presentation" style="display: inline; font-style: normal; font-weight: normal; line-height: normal; font-size: 15px; text-indent: 0px; text-align: left; text-transform: none; letter-spacing: normal; word-spacing: normal; overflow-wrap: normal; white-space: nowrap; float: none; direction: ltr; max-width: none; max-height: none; min-width: 0px; min-height: 0px; border: 0px; padding: 0px; margin: 0px; position: relative;">P×r×2100P×r×2100
= $ 3,750
Therefore, the simple interest for 2 years = $ 3,750
In case of Compound Interest:
Here,
P = principal amount (the initial amount)
Number of years the amount is deposited or borrowed for (n) = 2 year
Using the compound interest when interest is compound