if you want to deposit a sum for 2 years what would you opt for .,a.simple interest of 8% ,b .CI of 8% compounded annually , c .compound interest of 8% compounded half early
Answers
The amount which is lent / deposited is called Principal
The money that the principal generates is called Interest. This is the money generated as a result of borrowing/lending.
Compound Interest is the interest calculated on the cumulative amount, rather than being calculated on the principal amount only.
Amount, A = P [1 + (R / 100)]n, where P is the principal, R is the rate of interest per unit time period and n is the time period.
Compound Interest, CI = Amount – Principal
If compounding period is not annual, rate of interest is divided in accordance with the compounding period. For example, if interest is compounded half yearly, then rate of interest would be R / 2, where ‘R’ is the annual rate of interest.
If interest is compounded daily, rate of interest = R / 365 and A = P [ 1 + ( {R / 365} / 100 ) ]T, where ‘T’ is the time period. For example, if we have to calculate the interest for 1 year, then T = 365. For 2 years, T = 730.
If interest is compounded monthly, rate of interest = R / 12 and A = P [ 1 + ( {R / 12} / 100 ) ]T, where ‘T’ is the time period. For example, if we have to calculate the interest for 1 year, then T = 12. For 2 years, T = 24.
If interest is compounded half yearly, rate of interest = R / 2 and A = P [ 1 + ( {R / 2} / 100 ) ]T, where ‘T’ is the time period. For example, if we have to calculate the interest for 1 year, then T = 2. For 2 years, T = 4.
For finding the time period in which a sum of money will double itself at R % rate of compound interest compounded annually, we generally use either of the following two formulas :
Time, T = 72 / R Years
Time, T = 0.35 + (69 / R) Years
When rate of interest is different for different years, say R1, R2, R3 and so on, the amount is calculated as A = P [1 + (R1 / 100)] [1 + (R2 / 100)] [1 + (R3
Step-by-step explanation:
ci of 8 % compounded half yearly