Question

explain the concept of interest for us? Be sure to distinguish between “simple interest” and “compound interest.”

Answer 1

Interest : interest recived or paid against the giving the money deposited or taken from any others. At the time of our money is deposited in bank than against this we recieve som cash back in terms of interest. So concept of interest is reward of giving our money to others or payment made to the others for using there money.

Simple Interest: Simple interest means the regulary the interest amount is paid on the our principal value. In simple interest all amount paid for any deposit is same . So in simple interest, calculation is always made on the pricipal value.

Compound Interest : Compound interest means the interest calculation is made on principal Value + interest accumulated on that value. So Compound interest is the interest value which is calculated on par value + interest of that amount. Compound interest is always greater than simple interest .