• Math

  Math problem about interest.

  Posted by Priya on June 5, 2023 at 7:33 pm

  What is simple interest and compound interest? Discuss with their formulas.

  Hina replied 3 months, 3 weeks ago 2 Members · 1 Reply
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  Hina

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  June 5, 2023 at 7:53 pm

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  Q. What is Simple Interest?

  Ans. Simple interest is a percentage of money added to the debt of a borrower whenever he takes a loan. Since simple interest rates are compounded annually they are highly preferred by the borrowers. It is calculated on the principal amount on a yearly basis. The formula for simple interest is:

  Simple Interest = ( PxRxT) / 100 ,

  where is P= Principal Amount borrowed, R= Rate of interest, T= Period of time

  Q. What is Compound Interest?

  Ans. Compound interest is a percentage of money added to the debt of a borrower at any time. Since it is compounded at any time, it is highly preferred by the investors and is considered a financial burden for the borrowers due to high returns. It is calculated on the principal amount at a certain time along with the simple interest compounded for the previous year. The formula for compound interest is :

  Compound Internet = P(1+R/100)^n ,

  P= Principal Amount, R= Rate of interest, n = time period

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