FULL NAME:

Daniel Eduardo Herazo Herrera

Karina Paola Antequera Vital
Daison Manuel Castro Moncaris
Jhulina Paulina Mendoza Jimenez

SIMPLE
COMPOUND INTEREST
 01.
¿Simple or compound interest?

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¿Simple or compound interest?
When a person borrows money from a lender or from any bank or financial institution, the
lender charges an additional amount for the use of the money, called interest. The interest rate
is mutually agreed by both parties, and can be charged in two ways: simple interest or
compound interest.

Simple interest is calculated on the principal, or original,

amount of a loan.

Compound interest is calculated on the amount of the principal and also on the
accrued interest of previous periods and can therefore be considered as 'interest
on interest'.
 02.
Concept
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INTERES COMPUESTO

The first is the interest rate at which it is charged

only on the amount borrowed, but in the case of
compound interest, what is charged is calculated on
the amount borrowed plus the interest accrued to
the principal.
SIMPLE INTEREST

The first is the interest rate at which it is charged only

on the amount borrowed, but in the case of compound
interest, what is charged is calculated on the amount
borrowed plus the interest accrued to the principal.
 03.
Simple and compound interest
Comparative table

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 Simple interest Compound interest
It is an interest rate that is added to the
A non-capitalizable interest rate has no
capital at the maturity of the period,
Definition impact on the initial amount of an
increasing the initial amount of the
investment.
investment

It is calculated on the initial capital. It is calculated on the final capital.

Characteristics It does not vary. It increases in each period.

It does not generate an increase in Generates capital increase.

capital.
Initial capital.
Initial capital.
Capital final.
Interest applied to capital.
Elements
Interests.
Time.
Time.
Interest paid.
Formula I= C x i x t Cf= Ci (1+i)ᵗ
 04.
Characteristics

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 Features of simple interest
Simple interest has three essential characteristics:

The capital will not vary in the period that the operation lasts (30 days, 60
days, 90 days, etc.)

Each time you start a new investment or credit period, the interest will
remain the same.

Interest is calculated and paid on the initial principal.

 Characteristics of compound interest

Compound interest has 3 elements that define it:

As interest is added to the capital in each period, it increases.

Interest rates are increasing in each period.

In each new investment or credit period, interest is calculated based on the

current capital.
Thank you all

Team Dinastina