Question

Can someone please elaborate Compund Interest with examples?​

Answer 1

Step-by-step explanation:

CI.= P(1+R ) ki power n

_

100

Answer 2

Answer:

Compound interest is calculated using Compound interest formula.

Multiply the principal amount by one plus the annual interest rate to the power of the number of compound periods to obtain a combined figure for principal and compound interest i. e. total amount. If you want compound interest then subtract the principal from the total amount.

Step-by-step explanation:

The above assumes interest is compounded once per period i.e. yearly or annually. When incorporating multiple compounds per period such as monthly compounding, half yearly compounding, quarterly compounding, etc. the formula changes. It looks like this:

$A=P(1+\frac{r}{n})^{nt}$

Where, A -------> Total Amount

P --------> Principal Amount

r ---------> Rate of Interest

n ----------> Number of times interest is compounded per unit time.

t ------------> Time

Now,

∴$C.I.=(A-P)$

Let's look at an example:

If an amount of Rs. 1200 is deposited into a savings account at an annual interest rate of 5% , compounded monthly, the value of investment after 2 years. Also find the compound interest.

Solution:

The value of investment after 2 years can be calculated as follows:

P = 1200

r = 5% = 5/100 = 0.05

t = 2

n = 12

If we put these values into the above formula we get,

$A = 1200 * (1 + \frac{0.05}{12} )^{12*2}$

          = 1325.93 (Approx)

∴Total Amount he get after 2 years = Rs. 1326.

∴ Compound interest = (A - P)

                                    = Rs. (1326 - 1200)

                                    = Rs. 126 .

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