When a person takes a loan from a bank so heshe has to return the principal borrowed plus the interest amount so that the total amount returned is called Amount. Using the formula for simple interest we can develop a similar formula for compound interest. P Principle dollars.
The calculation of simple interest is based on the following formula.
N Number of time periods of loan. R interest rate in percentage T time duration in years. This math video tutorial explains how to use the simple interest formula to solve word problems. N Number of time periods of loan.