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# Compare simple interest and compound interest.

The major differences between simple interest and compound interest are as follows −

Simple interest

It is the percentage interest on total principal amount.

Low returns.

Principal is constant.

Growth of both principal and interest is constant.

Interest will be charged only on principal amount.

Easy to calculate.

Formula: PTR/100.

Compound interest

It is the percentage interest charged on principal and accrued interest.

High returns compared to simple interest.

Both principal and accrued amounts changes because of addition of interest during the period.

Principal and interest will grow at pace.

Interest will be charged on both principal and interest.

Difficult to calculate, when compared to simple interest.

Formula = P(1+(r/100))^t – P

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