A financial company offers compound interest at the rate of 5℅ for the first year and 6℅ for the second year. Find the internet on a sum of rupees 63000 at the end of the second year.
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Answer:
Types of Compound Interest
There are generally two types of compound interest used.
Periodic Compounding - Under this method, the interest rate is applied at intervals and generated. This interest is added to the principal. Periods here would mean annually, bi-annually, monthly, or weekly.
Continuous Compounding - This method uses a natural log-based formula and calculates interest at the smallest possible interval. This interest is added back to the principal. This can be equalled to the constant rate of growth for all natural growth. This figure was born out of physics. It uses Euler’s number which is a famous irrational number which is known to more than 1 trillion digits of accuracy. Euler’s number is denominated by the letter “E”.
Periodic Compound Interest Formula Overview
There are two formulas you can use to calculate compound interest, depending on what result you wish to find out. You can find out the following:
The total value of the deposit.
The total compound interest earned.
Value of the Deposit
Formulas can be a deterrent to many. If you aren’t savvy with math, your eyes turn away from these codes or just skip them altogether. But once it’s explained, it’s pretty simple to understand. To calculate the total value of your deposit, the formula is as follows:
Step-by-step explanation:
Answer:
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