What is Simple Interest and Compound Interest?
Above question from Maths
Answers
Answer:
Simple interest is interest calculated on the principal portion of a loan or the original contribution to a savings account. Simple interest does not compound, meaning that an account holder will only gain interest on the principal, and a borrower will never have to pay interest on interest already accrued.
Compound interest is the addition of interest to the principal sum of a loan or deposit, or in other words, interest on interest. It is the result of reinvesting interest, rather than paying it out, so that interest in the next period is then earned on the principal sum plus previously accumulated interest.
Step-by-step explanation:
By definition, simple interest is the interest amount for a particular principal amount of money at some rate of interest. in contrast, compound interest is the interest calculated on the principal an the interest accumulated over the previous period