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Simple interest is calculated one time @ a specified rate over a specific length of time. Compound interest is calculated multiple times @ a specified rated divided by the number of given periods within a specified time.
example: $100 @ 10% interest over 1 year.
Simple interest: principle x rate x time = interest;
$100 x .10 x 1 = $10
example: $100 @ 10% interest compounded quarterly over 1 year.
Compound interest: principle x {(1 + rate / #periods)n} = interest
$100 x {(1 + .10 / 4 )^4} =
$100 x (1 .025 )^4 =
$100 x 1.1038 = $10.38
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What is the calculation for a simple compound interest rate?
There is simple interest and there is compound interest but this question is the first that I have heard of a simple compound interest.
What makes the simple interest simple?
It is interest on simply the original capital. After the first period, compound interest involves interest on the interest earned in previous periods and soit not simple.
What is the formula for a simple compound interest rate?
Simple Interest = p * i * n p is principle and i is interest rate per period and n is the number of periods. A = P(1 + r)n is for compound interest.
How is interest different from compound interest?
Simple interest is interest paid on the original principle only, Compound interest is the interest earned not only on the original principal, but also on all interests earned previously.
How much interest will 12000 be at 6 in 4 years?
The answer will depend on whether the interest is simple or compound.
