What is the difference between Simple and Compound interest?

Answer 1

Simple Interest is interest paid on Principle, Compound Interest is Interest on Principle & Interest

Answer 2

Interest on interest is the difference. Formula for simple Int. is I=PNR/100 Compound Int. is A=(P+I/100)n or t This is what we learn in mathematics. In Banking calculation interest account will be maintained separately . Interest amount will not be added to Principal.For heavy loans and long repayment loans simple interest formula is very beneficial. In present banking only commercial rate is be charged on compound interest basis. Hope you have convinced. Thank you.

Answer 3

Simple Interest is the interest for the investment alone..
For Example..
Investment is 1000, your interest percentage is 10% year
1st Year = 1000 x 10% = 1100
2nd Year= 1000 x 10 % = 1100
__________
Total = 2200 / -
_____________

Compound is the interest type which give you interest also for Interest received previously along with the investment invested...
For Example :

Investment is 1000, your interest percentage is 10% year
1st Year = 1000 x 10% = 1100
2nd Year= 1100 x 10 % = 1110
__________
Total = 2210 / -
_____________


I hope you got it...