Simple Interest And Compound Interest
1.Interest Is Money Paid By Borrower To Lender For Using Of a Money For a Specific Time Of Period.
2.The Money Borrowed Is Called Principal.
3.The Rate At Which Interest Is Calculated On The Principle Is called Rate Of Interest.
4.Amount = Principal+Interest.
5.Terms:
Simple Interest(SI)
Principal(P)
Rate Of Interest(R)
Number Of Years(T)
Amount(A)
6.Formulas For Simple Interest
SI=(P*R*T)/100
A=P+SI=P+(P*R*T)/100
A=P(1+R*T/100)
Compound Interest: Compound Interest Is Added To The Principal At The End Of Each Period And Amount Would Become Principal Of The Next Year. And Process Would Be Repeated After The Specified Amount Of Time..
Compound Interest= P[(1+R/100)^n-1]
3.When Principal Changes After 6 Months, Then Formula Would Be: A=P(1+R/2/100)^2n
4.When Interest Is Compounded Annually, And Time Fraction Is 3 1/3yr, Then
A=P(1+R/100)^3 * [1+R/3/100]
Special Condition: When The Time Is Considered 2 Years, Then Difference Between SI And CI Is
Difference=P(R/100)^2
Simple Interest And , Compound Interest , For Competitive Exams
2.The Money Borrowed Is Called Principal.
3.The Rate At Which Interest Is Calculated On The Principle Is called Rate Of Interest.
4.Amount = Principal+Interest.
5.Terms:
Simple Interest(SI)
Principal(P)
Rate Of Interest(R)
Number Of Years(T)
Amount(A)
6.Formulas For Simple Interest
SI=(P*R*T)/100
A=P+SI=P+(P*R*T)/100
A=P(1+R*T/100)
Compound Interest: Compound Interest Is Added To The Principal At The End Of Each Period And Amount Would Become Principal Of The Next Year. And Process Would Be Repeated After The Specified Amount Of Time..
There Are Different Conditions For Compound Interest Calculation
1.If There Are Different Rate Of Interest
For Every Year. For Example For First Year: R1, For Second Year: R2,
For Third Year: R3, For Fourth Year R4 Than Total Amount Would Be
A= P(1+R1/100)(1+R2/100)(1+R3/100)(1+R4/100)
2.When Rate Of Interest Is Same For Every Year, Then Total Amount Would Be, A=P(1+R/100)^n AndCompound Interest= P[(1+R/100)^n-1]
3.When Principal Changes After 6 Months, Then Formula Would Be: A=P(1+R/2/100)^2n
4.When Interest Is Compounded Annually, And Time Fraction Is 3 1/3yr, Then
A=P(1+R/100)^3 * [1+R/3/100]
Special Condition: When The Time Is Considered 2 Years, Then Difference Between SI And CI Is
Difference=P(R/100)^2
Simple Interest And , Compound Interest , For Competitive Exams
