Compound interest is interest earned on both the principal and on the accumulated interest. Compound interest is widely used instead. Simple interest is rarely used in the real world. For example, if one person borrowed $100 from a bank at a simple interest rate of 10% per year for two years, at the end of the two years, the interest would come out to:
To determine an interest payment, simply multiply principal by the interest rate and the number of periods for which the loan remains active. Simple interest refers to interest earned only on the principal, usually denoted as a specified percentage of the principal. The concept of interest can be categorized into simple interest or compound interest. When paying interest, the borrower will mostly pay a percentage of the principal (the borrowed amount). Interest is the cost of using borrowed money, or more specifically, the amount a lender receives for advancing money to a borrower. Related Interest Calculator | Investment Calculator | Auto Loan Calculator
