Before knowing what are interest formulas, let us recall what is meant by interest. The word "interest" means the extra amount earned by the investor along with the investment (or) the amount owed by the borrower along with the amount lent. There are two types of interests simple interest and compound interest. Let us know what are simple and compound interest formulas.
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The simple interest on a principal amount is the same every year. But the compound interest for a particular year depends upon the principal amount of that year and hence it varies every year. Here are the formulas for interest.