JAIPUR NATIONAL

UNIVERSITY

PRESENTATION ON BUSINESS MATHEMATICS

Difference between simple and compound interest
Submitted to- Submitted by-
Mr. Dhruv sir Yash soni
BBA-1-A
INTEREST-

Interest is payment from a borrower or deposit-

taking financial institution to a lender or depositor of
an amount above repayment of the principal sum
(i.e. the amount borrowed). It is distinct from a fee
which the borrower may pay the lender or some
third party.
SIMPLE INTEREST-

Simple interest is a quick method of calculating

the interest charge on a loan. Simple interest is
determined by multiplying the daily interest rate by
the principal by the number of days that elapse
between payments.
COMPOUND INTEREST

Compound interest is the addition ofinterest to the

principal sum of a loan or deposit, or in other
words, intereston interest. It is the result of
reinvesting interest, rather than paying it out, so
that interest in the next period is then earned on the
principal sum plus previously-accumulatedinterest.
DIFFERENCE
The interest is typically expressed as a
percentage and can be
either simple or compounded. Simple interest is
only based on the principal amount of a loan,
while compound interest is based on the
principal amount and the accumulatedinterest.
BASIS FOR COMPARISON SIMPLE INTEREST COMPOUND INTEREST

Simple Interest refers to an Compound Interest refers to an

interest that is calculated as a interest which is calculated as a
Meaning percentage of the principal percentage of principal and
amount. accrued interest.

Return Less Comparatively high

Principal Constant Goes on changing during the

entire borrowing period.

Growth Remains uniform Increases rapidly

Interest charged on Principal Principal + Accumulated Interest

Formula Simple Interest = P*r*n Compound Interest = P*(1 + r)^nk

THANK YOU