Question

Hey there, kindly explain the formula for compound interest.

Answer 1

The concept of compound interest is that interest is added back to the principal sum so that interest is earned on that added interest during the next compounding period.

The formula for annual compound interest, including principal sum, is:

A = P (1 + r/n) (nt)

Where:

A = the future value of the investment/loan, including interest

P = the principal investment amount (the initial deposit or loan amount)

r = the annual interest rate (decimal)

n = the number of times that interest is compounded per year

t = the number of years the money is invested or borrowed for

Answer 2

Compound interest is calculated by multiplying the initial principal amount by one plus the annual interest rate raised to the number of compound periods minus one.

According to formula,

to formula,An = P( 1 +r/100)

to formula,An = P( 1 +r/100)Where A is total amount after n years, r is the rate. P is the amount initially

to formula,An = P( 1 +r/100)Where A is total amount after n years, r is the rate. P is the amount initiallyAn =10, 000( 1 + 10/100)

to formula,An = P( 1 +r/100)Where A is total amount after n years, r is the rate. P is the amount initiallyAn =10, 000( 1 + 10/100)=10,000( 1+0.1)"

to formula,An = P( 1 +r/100)Where A is total amount after n years, r is the rate. P is the amount initiallyAn =10, 000( 1 + 10/100)=10,000( 1+0.1)"=10,000(1.1)

to formula,An = P( 1 +r/100)Where A is total amount after n years, r is the rate. P is the amount initiallyAn =10, 000( 1 + 10/100)=10,000( 1+0.1)"=10,000(1.1)An =10,000(1.1)

to formula,An = P( 1 +r/100)Where A is total amount after n years, r is the rate. P is the amount initiallyAn =10, 000( 1 + 10/100)=10,000( 1+0.1)"=10,000(1.1)An =10,000(1.1)now, put n = 1 A1 =10, 000(1.1), put n =2, A2 =10,000(1.1)2

to formula,An = P( 1 +r/100)Where A is total amount after n years, r is the rate. P is the amount initiallyAn =10, 000( 1 + 10/100)=10,000( 1+0.1)"=10,000(1.1)An =10,000(1.1)now, put n = 1 A1 =10, 000(1.1), put n =2, A2 =10,000(1.1)2in the same way, A3 =10, 00(1.1)

to formula,An = P( 1 +r/100)Where A is total amount after n years, r is the rate. P is the amount initiallyAn =10, 000( 1 + 10/100)=10,000( 1+0.1)"=10,000(1.1)An =10,000(1.1)now, put n = 1 A1 =10, 000(1.1), put n =2, A2 =10,000(1.1)2in the same way, A3 =10, 00(1.1)you can see that A2/A1 = A3/A2

to formula,An = P( 1 +r/100)Where A is total amount after n years, r is the rate. P is the amount initiallyAn =10, 000( 1 + 10/100)=10,000( 1+0.1)"=10,000(1.1)An =10,000(1.1)now, put n = 1 A1 =10, 000(1.1), put n =2, A2 =10,000(1.1)2in the same way, A3 =10, 00(1.1)you can see that A2/A1 = A3/A2so, {An} is in Geometric progression.

to formula,An = P( 1 +r/100)Where A is total amount after n years, r is the rate. P is the amount initiallyAn =10, 000( 1 + 10/100)=10,000( 1+0.1)"=10,000(1.1)An =10,000(1.1)now, put n = 1 A1 =10, 000(1.1), put n =2, A2 =10,000(1.1)2in the same way, A3 =10, 00(1.1)you can see that A2/A1 = A3/A2so, {An} is in Geometric progression.now,

to formula,An = P( 1 +r/100)Where A is total amount after n years, r is the rate. P is the amount initiallyAn =10, 000( 1 + 10/100)=10,000( 1+0.1)"=10,000(1.1)An =10,000(1.1)now, put n = 1 A1 =10, 000(1.1), put n =2, A2 =10,000(1.1)2in the same way, A3 =10, 00(1.1)you can see that A2/A1 = A3/A2so, {An} is in Geometric progression.now,amount payable after 5years

to formula,An = P( 1 +r/100)Where A is total amount after n years, r is the rate. P is the amount initiallyAn =10, 000( 1 + 10/100)=10,000( 1+0.1)"=10,000(1.1)An =10,000(1.1)now, put n = 1 A1 =10, 000(1.1), put n =2, A2 =10,000(1.1)2in the same way, A3 =10, 00(1.1)you can see that A2/A1 = A3/A2so, {An} is in Geometric progression.now,amount payable after 5yearsA5 =10,000(1.1)^5

to formula,An = P( 1 +r/100)Where A is total amount after n years, r is the rate. P is the amount initiallyAn =10, 000( 1 + 10/100)=10,000( 1+0.1)"=10,000(1.1)An =10,000(1.1)now, put n = 1 A1 =10, 000(1.1), put n =2, A2 =10,000(1.1)2in the same way, A3 =10, 00(1.1)you can see that A2/A1 = A3/A2so, {An} is in Geometric progression.now,amount payable after 5yearsA5 =10,000(1.1)^5=16, 105.1 Rs