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Home  > Introduction to Interest. Simple vs. Compound Interest.
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Introduction to Interest. Simple vs. Compound Interest.

Provided by Khan Academy


Interest is the basis of modern capital markets. Depending on whether you are lending or borrowing, it can be viewed as a return on an asset (lending) or the cost of capital (borrowing). These two videos will explain to you what interest is and help you understand the difference between simple and compound interest. 

Introduction to interest: What interest is. Simple versus compound interest.

Simple interest is interest paid only on principal, while compound interest is paid both on the principal and on the interest previously earned. Proceed to the next video to continue learning about simple and compound interest. 

Interest (part 2): More on simple and compound interest 

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