Answer: Simple interest is calculated only on the principal amount, when compounded is calculated on the principal amount and the interests.
Explanation:
Hi, the difference between compounding and simple interest is that the simple interest is calculated only on the principal amount deposited, the original amount.
A = P (1 + rt)
In the other hand, compounded interest is calculated on the principal amount and in the accumulated interests of the different periods (interest on interest)
A = P (1 + r/n) (nt)
n is the number of times that interest is compounded per unit t
