The differences between compound and simple interest; Simple interest: Compound interest: Interest is accrued once - at the end of the period: Interest is accrued every year: Only the initial deposit is taken into account in the calculation: The initial deposit plus the yearly earnings are taken into account in the calculation. Compound Interest Formula: Amount = Principal * [1 + Rate of Interest/100] ... Simple interest for (4-2.5) years = 16500 - 15000. Therefore, SI for 1.5 years = Rs. 1500. ... He noticed that the ratio between the difference of compound interest and the simple interest of 3 years and that of 2 years is 25:8 . The rate of interest per annum is ?. For example if you wanted to double an investment in 5 years, divide 72 by 5 to learn that you'll need to earn 14.4% interest annually on your investment for 5 years: 14.4 × 5 = 72. The Rule of 72 is a simplified version of the more involved compound interest calculation.

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