The interest, typically expressed as a percentage, can be either simple or compounded. If the interest is calculated once a year then the interest is called simple interest. Simple and compound 8 interest interest is the fee paid for borrowed money. Simple interest simple interest tricks simple interest. Then find the balance after the given number of years. This video and text below show you how to calculate simple and compound interest. In every exam you will get at least 34 questions from this topic. Find out the differences between simple and compound interest. Interest is defined as the cost of borrowing money or the rate paid on a deposit to. The simple interest was never so simple in the books and now its our duty to provide you the solution for your maths problems. If simple interest is paid, interest is calculated only on the principal. Interest that is earned on both the principal and any interest that has been earned previously. Improve your math knowledge with free questions in compound interest. Will martyn double his money in 15 years by investing his money with bank of.
Recall that simple interest is earned or paid only on the principal. Gcse maths compound and simple interest difference. The difference between the compound and simple interest for 3 years will be. We pay interest when we use other peoples money such as when we borrow from a bank or a friend.
Interest is the fixed amount paid on borrowed money. Simple interest is the interest that is computed on the original principal only. Simple and compound interest worksheet 1 write as decimals. Simple and compound interest math for business and life. While balancing your checkbook or calculating your monthly expenditures on espresso. The difference between simple interest and compound interest on a sum for 2 years at 8% when the interest is compounded annually is rs. Simple interest i 5 100 prn compound interest a 5 1 100 p r n 1 final amount i 5 a 2 p interest where p is the principal r is the interest rate per period expressed as a percentage n is the number of periods use 1 year 5 52 weeks 5 365 days. The sum of the principal and interest is called the amount. A 5 p1 1 rt where a represents the amount of money in the account at the end of the time period, p is the principal, r is the annual interest rate, and t is the time in years. Interest is the cost of borrowing money, where the borrower pays a fee to the lender for the loan. Learn about simple and compound interest investopedia. In this lesson we take a look at interest simple interest and compound interest as well as consider key xample questions and xercises. The mathematical formula for calculating compound interest depends on. We receive interest when we let others use our money for example, by depositing money in a savings account or making a loan.
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