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Question

Can compound interest be calculated using simple interest formula?Justify.

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Solution

Dear Student,Compound interest can be calculated using the simple interest formula.In compound interest, we earn interest on the principal amount as well as the accumulated interest (till date).So, Principal amount for second year=Given princial amount+Interest earned in first year (This interest can be calculated using the simple interest formula)Principal amount for third year=Principal amount for second year+Interest earned in second year (This interest can be calculated using the simple interest formula)and so on.Regards

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