SIMPLE & COMPOUND INTEREST

 PRINCIPAL

              The money borrowed or lent out for a certain period is called the principal or the sum.

                                                                        INTEREST

                     Extra money paid for using other's money is called interest

                                         

                                                                     SIMPLE INTEREST

                     If the interest on a sum borrowed for certain period is reckoned uniformly, then it is called simple interest.

Let Principal = P, Rate = R% per annum (p.a.) and Time = T years. Then

Simple Interest =		P x R x T
		100

Frequent Compounding of Interest:

What if interest is paid more frequently?
Here are a few examples of the formula:

Annually = P × (1 + r) = (annual compounding)

Half-yearly = P (1 + r/2)2 = (half-yearly compounding)

Quarterly = P (1 + r/4)4 = (quarterly compounding) 

Monthly = P (1 + r/12)12 = (monthly compounding)

CI = Amount - principal
SI = PTR/100