Simple interest
Simple interest is earned on the original amount only, so it is the same every year. Multiply the amount, the yearly rate and the time in years, and divide by 100.
Simple interest = P × R × T ÷ 100
Compound interest
Compound interest is added to the balance at the end of each period and then earns interest itself. The more often it is compounded, the faster it grows; bank fixed deposits in India usually compound every quarter. For k compoundings a year:
Amount = P × (1 + R ÷ (100 × k))^(k × T)
Example
₹10,000 at 8% a year for 3 years earns ₹2,400 of simple interest. Compounded yearly it earns ₹2,597, and compounded quarterly about ₹2,682, because each quarter’s interest starts earning too.