When money is borrowed, interest is charged on the amount borrowed for a specific period of time. This is called simple interest. The borrower has to pay back the lender the sum of the principal amount and the total interest for the specified period of time.
Simple interest is usually used for a short period.
For longer periods compound interest is calculated. In compound interest the interest is added to the principal amount after a specified time interval and then the interest is calculated on the new principal amount computed.
Learn to calculate simple interest and compound interest.
Learnhive Lesson on Simple Interest
Learnhive Lesson on Compound Interest