Question

What is the difference between simple and compound interest?

Simple interest is paid as long as the money stays in the bank; compound interest is only paid for a year at a time.
Simple and compound interest are two names for the same thing.
Simple interest is paid once a year; compound interest is paid at least quarterly.
Simple interest is paid on the principal only; compound interest is paid on both principal and interest.

Answer 1

Answer:

Simple interest is calculated on the principal, or original, amount of a loan. Compound interest is calculated on the principal amount and the accumulated interest of previous periods, and thus can be regarded as “interest on interest.”

Explanation:

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Answer 2

Simple interest is calculated on original, amount of a loan while Compound interest is calculated on the principal amount

What is interest?

Interest serves as the amount that is charged by the lender on a given loan.

There are simple and compound interest but the difference between them is that compound interest uses accumulated interest of previous periods in it's calculation.

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