what are the properties of simple and compund interest
please explain with an example
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Answers
Answer:
Simple interest is calculated by using only the principal balance of the loan each period. With compound interest, the interest per period is based on the principal balance plus any outstanding interest already accrued. Interest compounds over time.
Step-by-step explanation:
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Answer:
Compound interest is the interest calculated on the principal and the interest accumulated over the previous period. It is different from the simple interest where interest is not added to the principal while calculating the interest during the next period. Compound interest finds its usage in most of the transactions in the banking and finance sectors and also in other areas as well. Some of its applications are:
Increase or decrease in population.
The growth of bacteria.
Rise or Depreciation in the value of an item.