Question

What is the difference between simple and compound interest?

Answer 1

Answer:

Simple Interest is paid on principal only; compound interest is paid on both principal and interest

Explanation:

Final amount in case of simple interest= Principal + principal×interest rate×number of time period over which interest is valid

final amount in case of Compound Interest= A(1+r/n)^(rt)

Here A=Principal ampunt. r=interest rate, n=number of times interest is multiplied, t= number of time period elapsed

Answer 2

Simple interest is paid on the principal only; compound interest is paid on both principal and interest.