Given=P=1000 R=10% N=6 compound interest solutions
Answers
Step-by-step explanation:
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Compound Interest when Interest is Compounded Yearly
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We will learn how to use the formula for calculating the compound interest when interest is compounded yearly.
Computation of compound interest by using growing principal becomes lengthy and complicated when the period is long. If the rate of interest is annual and the interest is compounded annually then in such cases we use the following formula for compound interest.
If the principal = P, rate of interest per unit time = r %, number of units of time = n, the amount = A and the compound interest = CI
Then
A = P(1 +
r
100
)n and CI = A - P = P{(1 +
r
100
)n - 1}
Note:
A = P(1 +
r
100
)n is the relation among the four quantities P, r, n and A.
Given any three of these, the fourth can be found from this formula.
CI = A - P = P{(1 +
r
100
)n - 1} is the relation among the four quantities P, r, n and CI.
Given any three of these, the fourth can be found from this formula.
Word problems on compound interest when interest is compounded yearly:
1. Find the amount and the compound interest on $ 7,500 in 2 years and at 6% compounded yearly.
Solution:
Here,
Principal (P) = $ 7,500
Number of years (n) = 2
Rate of interest compounded yearly (r) = 6%
A = P(1 +
r
100
)n
= $ 7,500(1 +
6
100
)2
= $ 7,500 × (
106
100
)2
= $ 7,500 ×
11236
10000
= $ 8,427
Therefore, the required amount = $ 8,427 and
Compound interest = Amount - Principal
= $ 8,427 - $ 7,500
= $ 927
Step-by-step explanation:
A = P * ( 1+ r%/100)^n
A = 1000 *( 1 + 10 / 100)^2
A = 1000 * 11*11/10000
A = 12.1
C = P - A
C = 1000 - 12.1
C = 987.5
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