Hence, we can conclude that the interest charged by the bank is not simple interest; this interest is known as compound interest or CI. In this article, you will learn what is compound interest, the formula and the derivation to calculate compound interest when compounded annually, half-yearly, quarterly, etc. Thus, the compound interest (CI) is also called “interest on interest”. It plays an important role in determining the amount of interest on a loan or investment. Learn about the Interest Formula and how interest is calculated. Discover the various types of interest, such as simple and compound interest with solved examples. Simple interest is an interest that is calculated only on the principal amount for any given time period. The formula for simple interest is SI = (PRT)/100, where P is the interest, R is the rate, and T is the time period.
