Question

Compound interest on rs7000 at 7% of rate for 3years

Answer 1

Answer:

Explanation:In each of the following results, we use the following denotations:

A = future value

P = principal amount (initial investment)

r = annual nominal interest rate

n = number of times the interest is compounded per year

t = number of years for which the money is borrowed

Compound Interest Trick 1: If interest is not compounded yearly then

compound interest tricks

where

n= number of times compounding is done

if compounding is done half yearly then n = 2

if compounding is done quarterly then n = 4

when compounded monthly then n=12

Amount for Half Yearly Compounding, A = P {1+(R/2)/ 100}2T

(compound interest applied two times in a year)

Like Half Yearly Compound Interest, we can calculate the amount for Quarterly Compounding.

Amount for Quarterly Compounding,A = P {1+(R/4)/ 100}4T

Example 1: Sona deposited Rs. 4000 in a bank for 2 years at 5% p.a.rate. Find the amount received by her from the bank if interest is compounded half yearly.

Solution:

Principal value = Rs. 4000

Rate = 5%

Time = 2 years

Since the interest is compounded half yearly so 2 years = 4 times in two years

So, we have

A = P {1+(R/2)/ 100}2T

A= 4000{1+ (5/2)/100}4

A = 4000 x 41/40 x 41/40 x 41/40 x 41/40

A = Rs. 4415.25

So, Sona received Rs. 4415.25 from the bank after two years