Question

how to calculate simple interest and compound interest. and difference between them.

Answer 1

Formula for simple interest :
(P×R×T)/100
Amount in simple interest = P + SI

Formula for compound interest =
$ci \: = p \times(1 + (r \div 100))^{n} - p$

here ,
p = principal
r = rate of interest
t = time period
n = time period
SI = Simple interest
CI = Compound interest

Example :
P = 100
R = 10%
T = 2 year

SI = (100 × 10 × 2)/100
= RS 20

Amount = RS 100 + 20
= RS 120


CI = 100 ( 1 + 10/100)²- 100
= 100 ( 110/100)²
= RS 21

Amount = P + CI
= 100 + 21
= RS 121