SIMPLE INTEREST AND COMPOUND INTEREST
WHAT IS INTEREST?
FOR BORROWERS
It is the cost of borrowing money represented as rate or percentage annualy or half yearly or quaterly
FOR DEPOSITORS
It the amount the bank or building society will pay you for borrowing your money
TYPES OF INTEREST
SIMPLE INTEREST(SI)
COMPOUND INTEREST(CI)
SIMPLE INTEREST:
Simple interest is based on the principal amount that is invested or borrowed.
It is caluculated only upon the principal amount.
COMPOUND INTEREST:
Compound interest is based on the principal amount that is invested or borrowed and the interest gained in it's time period.
It is caluculated upon the principal amount+interest of the time period.
IMPORTANT FORMULAS TO BE KNOWN:
Before studying the formulas we should be aware of some terms:
- S.I :Simple Interest
- C.I:Compound Interest
- P:Principal amount(total amount borrowed or deposited)
- N:No.of years
- R:Rate of interest
SIMPLE INTEREST(SI)
These are the important formulas for finding the Simple interest,Principal amount,No.of.years and Rate of interest when any of the other values are given.
To find the total amount with interest use the below formula:
COMPOUND INTEREST(SI)
When the interest is compounded anually,half-yearly,Quaeterly and in fraction years.
When the rate of interest is different for different years:
for example R1%,R2%,R3% FOR 1ST,2ND AND 3RD years:
To find the present worth of the principal amount:
For finding the total amount in the compound interest:
Just apply the formulas in the neccesary place of questions.That's all about simple interest and compound interest.
OTHER USEFULLINKS
PROBLEMS ON TRAINSHEIGHT AND DISTANCE
BLOOD RELATIONS
EYE TIPS
HEALTH TIPS
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