**Important Concepts and Formulas**

1. The money taken as loan or invested
is called the principal.

2. The additional amount that a borrower
has to repay is called the interest.

4.

**Simple Interest = P × R × T/100**

5. The interest calculated on both the
principal and the accrued interest is called the compound interest.

6. Amount (A) = P(1 + R%)

^{n}^{}
7. Compound Interest = [P(1
+ R%)

^{n}] – P = P[(1 + R%)^{n}– 1]
(Where P = Principal, R = annual interest rate in percentage terms, and n = number
of compounding periods.)

8. Compound Interest (C.I.) = A – P.

9. The period after which the interest
is added to the principal is called conversion period.

10. If rates are different for the
consecutive years, then amount is P(1
+ R

_{1}) (1 + R_{2}) (1 + R_{3})… where R_{1}is rate percent for 1st year, R_{2}is rate percent for 2nd year, R_{3}is rate percent for 3rd year and so on.
11. In case of depreciation, the rate R
is replaced by (–R) in the formula.

So, A = P(1 + R%)

^{n }becomes A = P(1 – R%)^{n}^{}
To study about simple and compound interest in detail ------- Click Here!