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Question

What is the most common method of calculating interest?


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Solution

The two most common methods of calculating interest are simple interest and compound interest.

Simple Interest:

Simple Interest is the method of calculating the interest amount for some principal amount of money.

Formula:

S.I=P×T×R100

Where P is the principal amount, T is the time period, and R is the interest rate.

Compound Interest:

Compound interest is the interest calculated on the principal and the interest accumulated over the previous period.

Formula:

C.I=P1+rnnt-P

Where P is the principal amount, t is the time period, r is the interest rate, and n is the number of times interest is compounded per year.


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