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Common definitions of Simple & Compound Interest


The amount of money (or sum) borrowed or given on loan is called the PRINCIPAL and is denoted by P.



Rate of Interest

It is the amount of money paid for the use of money borrowed and is denoted by r %. It may be payable monthly, quarterly, half yearly or annually.




The sum of interest and the principal is called the AMOUNT.



The duration of the loan is called the time period and is generally denoted by T in years.



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