Simple and Compound Interest
Interest is the extra amount returned on the borrowed money. Person who gives the credit or loan receives the interest and is income for him. While on the other hand person who receives the credit pays this interest along with principal amount and it is an expense for him.
Interest can be calculated in two ways
In this method interest is calculated on the principal amount only.
Simple Interest = P X R X T
P = Principle
R = Rate of Interst
T = Time
In this method interest is added back to the principle and the total amount that is sum of principle and interest is used to calculate the interest.
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