Like a fixed monthly "thank you" from the bank for keeping your money there - the same amount every year.
I = (P × R × T) ÷ 100, where P = principal, R = rate %, T = time in years.
Example: $500 invested at 6% p.a. simple interest for 3 years: I = (500×6×3)÷100 = $90.
Instead of a fixed "thank you" each year, the bank pays interest on your growing balance - like a goat herd where the new kids also start having kids.
A = P(1 + R/100)T
Example: $500 at 6% p.a. compound interest for 2 years: A = 500(1.06)2 = 500 × 1.1236 = $561.80. Interest earned = $61.80 (more than simple interest's $60 over 2 years).
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Find the simple interest on $800 at 5% p.a. for 4 years.A loan of $1200 is taken at 8% p.a. …
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