Question

Match the following with appropriate time periods.

• A. T = 1 year
• B. T > 1 year
• C. Never

Answer 1

Simple interest is calculated on the original amount and is given by
$S.I.=\frac{PTR}{100}$

Compound interest is calculated on the principal amount and also on the accumulated interest of the previous years.
A = P × ${[1+\frac{R}{100}]}^n$

So, when compounded anually, at the end of first year, simple interest and compound interest will be equal. After that, the compound interest is always greater than the simple interest.