What is the difference between simple interest and compound interest?
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Simple Interest is calculated only on the principal, or on that portion of the principal which remains unpaid.
Compound interest is the concept of adding accumulated interest back to the principal, so that interest is earned on interest from that moment on. The act of declaring interest to be principal is called compounding (i.e. interest is compounded). A loan, for example, may have its interest compounded every month: in this case, a loan with $1000 principal and 1% interest per month would have a balance of $1010 at the end of the first month.
I presume that you know simple interest.
for compound interest, for first interest you get same as simple interest.
but the interest gets added to principal ... so we have new principal (previous principal + interest) ... and so it goes on and on.