Definition: Compound interest is calculated as a percentage as a total amount a the end of the previous compounding period.
= Present Value or Original Amount
= Annual Interest Rate as a Decimal
= multiplier
n = number of years of investment
Illustration: What will Rs 5000 invested at 8% p.a compound interest amount to after 2 years ?
Solution : An interest rate of 8% indicates that i = 0.08.
For 2 years , n = 2 and so = Rs 5000 = Rs 5832
To find interest only, we use
Compound interest = -
Illustration: How much interest is earned according to the above example1 .
Solution : interest earned = $ 5832 - $ 5000 = $ 832
now , To Find Compound Interest (CI) when Interest is Compounded Annually:
In such cases where interest is compounded yearly, the interest accrued during the first year is added to the principal and the amount so obtained becomes the principal for the second year. The amount at the end of the second year becomes the principal for the third year, and so on.
Illustration: Find the compound interest on Rs 25000 for 3 years at 6% per annum, compounded annually.
Solution: Principal for the first year = Rs. 25000.
Amount at the end of the first year = 25000 + 1500 = Rs 26500.
Principal for the second year = Rs. 26500.
Amount at the end of the second year = Rs 26500 + 1590 = Rs 28090.
Principal for the third year = Rs 28090.
Amount at the end of the third year = 28090 + 1685.40 = Rs 29775.40.
Therefore, compound interest = 29775.40 - 25000 = Rs 4775.40.
Compound Interest By Formula:
For the above example:
Principal = 25000
Rate= 6%
time= 3 years
Therefore, compound interest = 29775.40 - 25000 = Rs 4775.40.
Find the difference between compound interest and simple interest on a sum of Rs.25000 for 3 years at the rate of 4% per annum . | |||
Right Option : A | |||
View Explanation |
Find the amount at the end of 2 years of Rs.1000 at 4% compounded annually. | |||
Right Option : D | |||
View Explanation |
The difference between simple interest and C.I. at the same rate for Rs.5000 for 2 years in Rs.72. The rate of interest is? | |||
Right Option : D | |||
View Explanation |
Abhyas Methodology is very good. It is based on according to student and each child manages accordingly to its properly. Methodology has improved the abilities of students to shine them in future.
Being a parent, I saw my daughter improvement in her studies by seeing a good result in all day to day compititive exam TMO, NSO, IEO etc and as well as studies. I have got a fruitful result from my daughter.
My experience with Abhyas is very good. I have learnt many things here like vedic maths and reasoning also. Teachers here first take our doubts and then there are assignments to verify our weak points.
It was a good experience with Abhyas Academy. I even faced problems in starting but slowly and steadily overcomed. Especially reasoning classes helped me a lot.
Abhyas is a complete education Institute. Here extreme care is taken by teacher with the help of regular exam. Extra classes also conducted by the institute, if the student is weak.
It was good as the experience because as we had come here we had been improved in a such envirnment created here.Extra is taught which is beneficial for future.
I have spent a wonderful time in Abhyas academy. It has made my reasoning more apt, English more stronger and Maths an interesting subject for me. It has given me a habbit of self studying
A marvelous experience with Abhyas. I am glad to share that my ward has achieved more than enough at the Ambala ABHYAS centre. Years have passed on and more and more he has gained. May the centre flourish and develop day by day by the grace of God.
It has a great methodology. Students here can get analysis to their test quickly.We can learn easily through PPTs and the testing methods are good. We know that where we have to practice
My experience was very good with Abhyas academy. I am studying here from 6th class and I am satisfied by its results in my life. I improved a lot here ahead of school syllabus.