MEANING
Interest accurs only on the original principal
FORMULA
I = Pit
A = P + I
IMPORTANT POINTS
P = Principal
I= Rate of interest (in decimal)
T = Time (in years)
MEANING
Interest is calculated not only on the original principal,but also on the interest accured on it
FORMULA
A = P [ 1 + i / NOCCPY ] POW t * NOCPPY
C I = P [( 1+ NOCPPY )] POW t * NOCCPY - 1
IMPORTANT POINTS
NOCPPY = No. of conversion period per year
Annually = 1
Semi annually = 2
Quarterly = 4
Monthly = 12
n = t * NOCPPY