please can you explain the formula of simple and compound interest

Asked by nmsnirajsheth | 30th Sep, 2017, 05:01: PM

Expert Answer:

begin mathsize 16px style When space the space interest space is space calculated space on space the space original space principal space throughout space the space loan space period comma space
irrespective space of space the space length space of space the space period space for space which space it space is space borrowed comma space is space called space simple space interest.
straight S. straight I. equals fraction numerator Principal cross times Rate cross times Time over denominator 100 end fraction equals fraction numerator straight P cross times straight R cross times straight T over denominator 100 end fraction

Now comma space money space is space said space to space be space lent space at space compound space interest comma space when space the space interest comma space which space has space become space due
at space the space end space of space straight a space certain space fixed space period comma space is space not space paid space to space the space money space lender comma space but space is space added space to space the space money space lent.
Amount equals straight P open parentheses 1 plus straight r over 100 close parentheses to the power of straight n
where comma space straight P equals Principal comma space straight r equals space rate space of space interest space compounde space yearly comma space straight n equals number space of space years
straight C. straight I. equals Amount minus Principal end style

Answered by Rashmi Khot | 1st Oct, 2017, 06:33: PM

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