Question

What is Compound interest​

Answer 1

ANSWER⭐⭐❣❣

Compound Interest is the addition of Interest to the principal sum of a loan or deposits or in other words, Interest on Interest.

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Answer 2

$\huge{\bf{\red{\fbox{\underline{COMPOUND\: INTEREST }}}}}$

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. Compound interest is standard in finance and economics.

$\textbf{Coumpound interest = compound amount - principal amount }$

Let us take ans example to understand clearly ...

$\huge {Question}$


 Find the compound interest on Rs. 3000 at 5% for 2 years, compounded annually.

$\huge{Solution}$

Amount with CI = 3000 (1+ 5/100)2 = Rs. 3307.5

Therefore, CI = 3307.5 – 3000 = Rs. 307.5