Question

write formula to find amount to be paid through compound interest also explain each term in it

Answer 1

Answer:

Amount to be paid through compound Interest is given by:

A= P(1+r/100)ⁿ

Explanation:

Compound Interest:

Compound Interest for each period of time is calculated on the amount borrowed plus the total interest accumulated for the previous periods of time. Here we calculate interest on interest.

Let the amount is borrowed at  anum for 3 yrs for compound interest.

interest after end of first year I₁ = interest on principal

Interest after end of second year I₂= Interest on principal +interest on I₁

Principal,P:

It is the amount borrowed initially on which the interest is to be calculated.

Rate,R:

It is the percentage of amount borrowed is charged by the lender for giving the amount and it is generally calculated on yearly basis.

Time period,n:

It is the number of periods of time for which the money is lent or interest is received.

Amount,A:

It is the total amount paid by the borrower or received by the lender for the whole period of time.

Amount = Principal + Total interest.

For example 1000 Rs is taken as loan for 2 yrs for rate 10% per annum then compound interest would be:

P = 1000 Rs

r= 10% annum

n= 2

A= P (1 +r/100)ⁿ

  =1000(1+10/100)²

  =1210 Rs

So, CI = A- P

     CI = 1210-1000

         =210 Rs

Answer 2

Answer:

Formula to find amount to be paid through compound interest is $\mathrm{T}=\mathrm{PA}\left(1+\frac{\text { r }}{\mathrm{t}}\right)^{\mathrm{n}}$        

Step-by-step explanation:

• Compound interest is based on the amount of the principal of a loan or deposit – and interest rate – which accrues in conjunction with how often the loan compounds: typically, compounding occurs either annually, semi-annually, or quarterly.

                                       $\mathrm{T}=\mathrm{PA}\left(1+\frac{\text { r }}{\mathrm{t}}\right)^{\mathrm{n}}$

T = Total amount including interest

PA = Principal amount

r = The annual rate of interest for the amount borrowed or deposited

t = The number of times the interest compounds yearly

n = The number of years the principal amount has been borrowed or deposited