compoud interest with using formula tricks
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ci=p(1+r/100)^t
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Compound Interest is the interest calculated on the initial principal and the accumulated interest of previous periods of a deposit or loan.
In easy words, it can be said as "interest on interest". It makes a deposit or loan grow faster as compared to simple interest. The interest at which compound interest accumulates depends on the frequency of compounding; more the number of compounding periods, the greater the compound interest.
Note: The interest for the first month is same in both Simple Interest and Compound Interest. From second month, the interest starts changing.
The formula for Compound Amount
P [1+ R/100]n [When money is compounded annually]
= P [1+ R/(2*100)]2n [When money is compounded half-yearly]
= P [1+ R/(12*100)]12n [When money is compounded monthly]
Also, A = CI + P
Where,
P= Principal
R= Rate of Interest
n=Time (in years)
A= Amount
CI= Compound Interest
Note: The above formula: A = CI + P will give us total amount. To get the Compound Interest only, we need to subtract the Principal from the Amount.
The table given below lists the values of an initial investment, P = Re. 1 for certain time periods and rates of interest, calculated at both, simple and compound interest. If memorized this would be of great help in time management during the exam,
Rate⇒
Time⇓5%10%15%20% SICIDiffSICIDiffSICIDiffSICIDiff1 year1.051.0501.11.101.21.201.21.202 years1.101.10250.00251.21.210.011.41.440.041.61.690.093 years1.151.15750.00751.3
In easy words, it can be said as "interest on interest". It makes a deposit or loan grow faster as compared to simple interest. The interest at which compound interest accumulates depends on the frequency of compounding; more the number of compounding periods, the greater the compound interest.
Note: The interest for the first month is same in both Simple Interest and Compound Interest. From second month, the interest starts changing.
The formula for Compound Amount
P [1+ R/100]n [When money is compounded annually]
= P [1+ R/(2*100)]2n [When money is compounded half-yearly]
= P [1+ R/(12*100)]12n [When money is compounded monthly]
Also, A = CI + P
Where,
P= Principal
R= Rate of Interest
n=Time (in years)
A= Amount
CI= Compound Interest
Note: The above formula: A = CI + P will give us total amount. To get the Compound Interest only, we need to subtract the Principal from the Amount.
The table given below lists the values of an initial investment, P = Re. 1 for certain time periods and rates of interest, calculated at both, simple and compound interest. If memorized this would be of great help in time management during the exam,
Rate⇒
Time⇓5%10%15%20% SICIDiffSICIDiffSICIDiffSICIDiff1 year1.051.0501.11.101.21.201.21.202 years1.101.10250.00251.21.210.011.41.440.041.61.690.093 years1.151.15750.00751.3
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