Question

When to calculate simple interest and compound interest?

Answer 1

Answer:

Multiply the product by the time or term of the loan. For example, assume the principal is $100,000, the interest rate is 11 percent and the term is 2 years. The simple interest formula is I = P x R x T. Compute compound interest using the following formula: A = P(1 + r/n) ^ nt.

Answer 2

Step-by-step explanation:

Simple interest is calculated on the principal, or original, amount of a loan.

Compound interest is calculated on the principal amount and also on the accumulated interest of previous periods, and can thus be regarded as “interest on interest.”