Sunday, 24 April 2016

Simple Interest & Compound Interest

Simple Interest.

It is the Interest where Interest remain same every year

Formula for Simple Interest = P*R*t

where P= principle =intial investment
R=rate=if in percentage convert it into point form by dividing with 100
t=time=sometimes also written as n=time in years or annum

The formula that can give you a final amount ....adding its simple interest is as follow


Compound Interest

Suppose in first year your Interest was 10% and next year it increase 10% more  of that amount
suppose your P=100
then 1st year it gets CI=10  and A=100+10=110
Next year CI = 10 % of 110  not 100 as earlier .therefore A=211

Now this Non uniform interest rising is Known as Compound Interest


In Actuarial Science Notations of the Formula Changes In order to relate Terms with many other formulas