Question

Interest is calculated by multiplying an initial investment times the applicable interest rate and the period of time the money is used, whereas ? interest involves earning interest on the interest.

simple
compound

Answer 1

In simple interest, interest is calculated by multiplying an initial investment to the interest rate and the period of time money is invested.

In compound interest,Interest calculated on the interest earned.

Explanation:

Simple interest :- In this method of interest calculation, interest is calculated by multiplying an initial investment to the interest rate and the period of time money is invested.

Let Money invested = P

Rate of interest = R %

Time = T

⇒ Simple interest ( S.I. ) =
`(P R T)/(100)`

Compound interest :- In this method of interest calculation, Interest calculated on the interest earned. The formula of compound interest is as follows :-

⇒ Compound interest ( C.I. ) = P
`[1 + (R)/(100) ]^(T)` - P