##### need business and finance help for better understanding Simple and Compound Interest.

account_circle Unassigned
schedule 1 Day
account_balance_wallet \$5

The interest generated on that money is the amount of simple interest earned. If one were to leave that money in the bank for two years, then they would receive interest on the principal and on the simple interest. This is where your interest begins to compound. The process of accumulating interest on an investment over multiple time periods is known as compounding. As a final point, interest earned on the initial principal and reinvested interest during prior periods is compound interest.

Nov 20th, 2015

Hello Missash,

The difference between simple and compounded interest is that in simple interest, we work with the principal ony in calculating the total interest using the formula

PRT/100

where p is the principal, and r is the rate and t is time

for compound interest, the interest earned above ill also earn interest upon reinvestment such that the total interest will include the interest on the principal and interst on the principals interest. thuis we use

Interest= P(1+r/100) ^ n

where n is the number of periods of reinvestment of principal and gained interests.

Nov 20th, 2015

Thank you! Can you give me an example?

Nov 22nd, 2015

Thank you! Can you give me an example?

Nov 22nd, 2015

...
Nov 20th, 2015
...
Nov 20th, 2015
Oct 20th, 2017
check_circle