if 40,000 is invested for 6 years at 5% compounded quarterly
Answers
Answer:
How to calculate compound interest?
Compound interest can be calculated with a simple formula.
Compound Interest = Total amount of Principal and Interest in future (or Future Value) less Principal amount at present (or Present Value)
Compound Interest = P [(1 + i) n – 1]
P is principal, I is interest rate, n is number of compounding periods.
An investment of Rs 1,00,000 for 5 years at 12% rate of return compounded annually is worth Rs 1,76,234. From the graph below we can clearly see how an investment of Rs 1,00,000 has grown in 5 years.In compound interest one earns interest on interest. Therefore, the investment already includes all the previous interests. And interest is paid on that.
Year Investment(Rs) Interest(Rs) At maturity(Rs)
1 1,00,000 12,000 112,000
2 1,12,000 13,440 125,440
3 1,25,440 15,052.8 1,40,492.8
4 1,40,492.8 16,859.14 1,57,351.9
5 1,57,351.9 18,882.23 1,76,234.2
By understanding the importance of compound interest and acting on it by investing in appropriate investments, one can achieve high returns.
Answer:
Principal amount= 40,000
Time= 6 yrs
Rate= 5%
Step-by-step explanation:
Hope this helps.
