Math, asked by aru004, 1 year ago

what is compound interest

Answers

Answered by Shubhangi4

Hi...

Here is ur answer:

Compound interest is the interest amount calculated on the initial principal and also on the accrued interest of previous periods of a deposit/loan.

compound interest => At = A0(1+r)n

where:

A0 : principal amount, or initial investment
At : amount after time t
r : interest rate
n : number of compounding periods, usually expressed in year

Hope u get ur answer!!

aru004: this is formula for simple interest

aru004: Please make clear

Shubhangi4: ya

honeybansal: ok Compound interest (or compounding interest) is interest calculated on the initial principal and also on the accumulated interest of previous periods of a deposit or loan. compound interest can be thought of as “interest on interest,” and will make a sum grow at a faster rate than simple interest, which is calculated only on the principal amount. The rate at which compound interest accrues depends on the frequency of compounding

honeybansal: the higher the number of compounding periods, the greater the compound interest. Thus, the amount of compound interest accrued on $100 compounded at 10% annually will be lower than that on $100 compounded at 5% semi-annually over the same time period.

honeybansal: ur formula on compound interst is wrong

Shubhangi4: it is in my book it is formula of basic compound interest.

honeybansal: for the first year only simple interest is equal to compound interest

honeybansal: it doesn't mean tht it is the formula of compound interest

Shubhangi4: ok

Answered by saisanthosh76

Compound interest is the addition of interest to the principal sum of a loan or deposit, or in other words, interest on interest. It is the result of reinvesting interest, rather than paying it out, so that interest in the next period is then earned on the principal sum plus previously accumulated interest.

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