Simple Interest and Compound Interest Formulas

Simple Interest :

     In Naveen (a man) borrows some money from Sanjay for a certain period then the borrower  has to pay some extra money. This extra money given by Naveen is called interest on the money borrowed for that period.

The Principal  : The Money borrowed is called Principal.

The Interest : The extra money paid is called Interest.

The Amount : The sum of Principal and Interest is called amount.

 Formulas :

1. Simple Interest =

    P - Principal

    N - Number of Years

    T - Rate of Interest

2.  ; and  

3. Amount = Principal+Simple Interest

Compound Interest :

   If interest is not given at a certain time but this is added in the principal and then the interest is on the total amount (Principal + interest of first). Then this type of interest is called Compound interest and the total sum owned after a given time is called the amount of compound interest for that time.. The difference between an amount and the original principal is called the compound interest (C.I).

 Formulas :

    Let Principal = P, Time= T and Rate=% per annum.

1.  

2. When interest is compound annually :

             

3. When interest is compounded half-yearly :

 

4. When interest is compounded Quarterly :

 

5. Difference between Simple Interest and Compound Interest for 2 years

                

6. Difference between Simple Interest and Compound Interest for 3 years

             

7. Simple Interest into Compound Interest or Compound Interest into Simple Interest for 2 years 

           

8. Simple Interest amount for double