Compound Interest is differ from simple interest .If we calculate interest on principal with previous year interest , then calculated interest is called compound Interest.
Formula of Compound Interest =P[( 1+R/100) and its power t - 1 ]
suppose Principal =Rs.8000
rate of compound Interest =5%
Time = 2 year
Compound Interest = P[( 1+R/100) and its power t - 1 ]
C.I.= 8000[(1+5/100) and its power 2 -1]
C.I.=Rs. 820 /-