Calculate simple and compound interest.
Simple interest is calculated only on the principal amount, or on that portion of the principal amount which remains unpaid.
Unlike Compound Interest, where you earn interest on previously accumulated interest, simple interest only pays on the original amount you deposited or borrowed.
The standard mathematical formula for simple interest is:
I = P * R * T / 100Simple interest is commonly used for auto loans or short-term personal loans.
While most deposit accounts (like savings accounts) use compound interest to help your money grow faster, simple interest is simpler to calculate and understand.
What is the primary characteristic of Simple Interest compared to Compound Interest?