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how to calculate simple interest vs compound interest. Simple interest or amortizing interest also know as compound interest. Compound interest is calculated using the principal amount of the loan plus the interest that has accumulated over previous periods.
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Simple interest or amortizing interest also know as compound interest. In contrast compound interest is based on the principal amount and the interest that accumulates on it in every period. Simple Interest P x I x N.
Whats the difference between simple and compound interest anyway.
Simple interest is calculated using only the principal amount of the loan. When calculating interest you can use one of two methods. Basically the two major criteria to setting interest rates are the riskiness of the investment and what rate is commonly. Simple interest is calculated using only the principal amount of the loan.
