The principal (P) remains constant throughout the period for which the money (principal) is borrowed. But, when the borrower fails to pay the principal as it falls due, the interest for the first year (conversion period) is added to the original principal. This sum (P + 1st year interest on P) becomes the principal for the second year and so on. Hence, for every changing accrued on varying principal with Compound Interest, the amount of interest will be different in every year.
The principal (P) remains constant throughout the period for which the money (principal) is borrowed. But, when the borrower fails to pay the principal as it falls due, the interest for the first year (conversion period) is added to the original principal. This sum (P + 1st year interest on P) becomes the principal for the second year and so on. Hence, for every changing accrued on varying principal with Compound Interest, the amount of interest will be different in every year.
The principal (P) remains constant throughout the period for which the money (principal) is borrowed. But, when the borrower fails to pay the principal as it falls due, the interest for the first year (conversion period) is added to the original principal. This sum (P + 1st year interest on P) becomes the principal for the second year and so on. Hence, for every changing accrued on varying principal with Compound Interest, the amount of interest will be different in every year.