Q.Distinguish between simple interest and compound interest, giving the formula for each and one point on how they grow over time.

This is a theory question asking for the core contrast between the two methods of charging interest.

Simple interest is charged only on the original principal throughout the loan or deposit. The same amount of interest accrues every year, so the total interest grows linearly with time. Its formula is

Compound interest is charged on the principal plus all the interest accumulated so far. Because the base itself grows each period, the interest for each successive period is larger, and the total grows geometrically. For annual compounding its formula is

Key distinctions:

• Base: SI always uses the original principal; CI uses the ever-growing amount.
• Interest each period: constant under SI; increasing under CI.
• Growth pattern: linear (arithmetic) for SI; geometric (multiplicative) for CI. …

Stating only the formulas without explaining the underlying difference (fixed base versus growing base). Also wrongly claiming CI is always gr …