Question

WHAT IS COMPOUND INTEREST

Answer 1

Compound interest is the interest on interest. It is the addition of interest to the principal sum of a loan or deposit. It is accrued by reinvesting interest, instead of paying it out. So in the next period, interest is earned on the principal sum plus the previously accumulated interest.

Answer 2

                     Compound Interest

In the compound interest falls over the period of time is again inverted to further interest and if the principal does not remain the same for the entire loan period , due to addition of interest to the principal after a certain interest of time to form the new principal, then the interest obtained is called compound interest.

Here,

P = Principal

A = Amount

T = Time

R = Rate

n = Number of year, month, day.

$\fbox{Formula} \\ \\ CI=A-P \\ \\ i.e., P=\Bigg[ \bigg( 1+\frac{R}{100}\bigg)^n-1\Bigg]$