Question

The difference between compound and simple interest

Answer 1

$\huge\blue{Simple interest}$

When the interest is calculated only on principal values at the beginning for the given time period, then interest is called simple interest .

Formula

$si = \frac{prt}{100}$

$\huge\blue{Compound interest}$

When interest is calculated on the amount of previous year , then it is known as compound interest. In this method, principal grows as interest is added on it.

Formula

$amount = \: p( 1 + \frac{r}{100} {)}^{n}$

Answer 2

Answer:

Compound interest is the interest charged on a principal as a whole at the end of all the years given simple interest is a simple interest which is charged on a single year.