Download PDF – Basics of Simple And Compound Interest
Simple InterestDefinition: Simple interest is calculated on the principal amount over a period of time.Formula: I=P×R×TI = P times R times TI=P×R×TWhere:III = InterestPPP = Principal amountRRR = Rate of interest per year (in decimal)TTT = Time period (in years)Example: If you invest $1000 at an interest rate of 5% per year for 3 years, the simple interest is:I=1000×0.05×3=150I = 1000 times 0.05 times 3 = 150I=1000×0.05×3=150The total amount after 3 years will be:A=P+I=1000+150=1150A = P + I = 1000 + 150 = 1150A=P+I=1000+150=1150Compound InterestDefinition: Compound interest is calculated on the principal amount and also on the accumulated interest from previous…
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