Simple and Compound Interest Simple and Compound Interest


Simple and Compound InterestSimple and Compound Interest



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P - Principal, the sum of money lent or borrowed.

R - Rate of interest: Annual interest, often expressed as a percentage.

T - Time period for which the money is lent or borrowed.


Simple Interest = Principal * Time * Rate of interest / 100

 SI = P * T * R


For example, Principal is 4000, Rate of Interest is 8% and Time period is 4 years

SI = 4000× 8% × 4 =  4000× 0.08 × 4

= 1280.


In compound interest, the principal amount with interest after the first time period becomes the part of principal for the next time period.


CI =   [P (1 + R/100)^T] – P

Total amount = [P (1 + R/100)^T]


If time period is half-yearly,

    Amount = P[1 + (R/2)/100]^2T

If time period is quarterly,

    Amount = P[1 + (R/4)/100]^4T


For example,   Principal is 7500, Rate of Interest is 4% (compounded annually) and Time period is 2 years

Total Amount = [7500×(1+4/100)^2] = 8112.

CI = (8112 - 7500) = 612.

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Simple and Compound Interest

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P - Principal, the sum of money lent or borrowed. .

R - Rate of interest: Annual interest, often expressed as a percentage. .

T - Time period for which the money is lent or borrowed. .


Simple Interest = Principal * Time * Rate of interest / 100 .

  SI = P * T * R .


For example, Principal is 4000, Rate of Interest is 8% and Time period is 4 years.

SI = 4000× 8% × 4 =  4000× 0.08 × 4.

= 1280. .


In compound interest , the principal amount with interest after the first time period becomes the part of principal for the next time period.


CI =   [P (1 + R/100)^T] – P .

Total amount = [P (1 + R/100)^T] .


If time period is half-yearly, .

 ...

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