Simple and Compound Interest Formulas

Simple Interest: I= PxAPRxY

I= Interest A= Total Amount P= Principal (The original amount deposited or borrowed) Y= number of years

Simple Interest: A= P+PxAPRxY

I= Interest A= Total Amount P= Principal (The original amount deposited or borrowed) Y= number of years

What is the difference between compounding interest and simple interest?

Simple interest is interest paid only on the original investment and not on any interest added at later dates. Compound interest is interest paid both on the original investment and on all interest that has been added to the original investment. Since compound interest is based on both the original investment and on all interest that has been​ added, it results in a larger amount of money over time.

Compound Interest: A=P(1+(APR/n)^nY

n= number of compounding periods per year, month, etc