Compound Interest Compounded Annually
Compound Interest Compounded Annually
Definition: Compound interest is calculated as a percentage as a total amount a the end of the previous compounding period.
Formula:
First Type: 
,
where 
= Future Value
= 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
Second Type:
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.
Rs 1,000 invested at 6% for 5 Years. The compound interest when compounded annually is ____________ | |||
| Right Option : B | |||
| View Explanation | |||
Find the compound interest when Principal = Rs 3000, Rate = 5 % per annum and time = 2 years | |||
| Right Option : C | |||
| View Explanation | |||
Find the compound interest on Rs 10000 for 3 years at 6% per annum, compounded annually. | |||
| Right Option : A | |||
| View Explanation | |||
Students / Parents Reviews [20]
Abhyas institute is one of the best coaching institute in the vicinity of Ambala Cantt area. The teachers of the institute are well experienced and very helpful in solving the problems of the students.The good thing of the institute is that it is providing extra classes for the students who are w...
Aman Kumar Shrivastava
10thAbhyas institute is one of the best coaching institute in the vicinity of Ambala cantt.The institute provides good and quality education to the students.The teachers are well experienced and are very helpful in solving the problems. The major advantages of the institute is extra classes for weak...
Shreya Shrivastava
8thWhen I have not joined Abhyas Academy, my skills of solving maths problems were not clear. But, after joining it, my skills have been developed and my concepts of science and SST are very well. I also came to know about other subjects such as vedic maths and reasoning.
Sharandeep Singh
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Aman Kumar Shrivastava
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Cheshta
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Aman Kumar Shrivastava
10thAbhyas 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.
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8thThe experience was nice. I studied here for three years and saw a tremendous change in myself. I started liking subjects like English and SST which earlier I ran from. Extra knowledge gave me confidence to overcome competitive exams. One of the best institutes for secondary education.
Aman Kumar Shrivastava
10thAbhyas is good institution and a innovative institute also. It is a good platform of beginners.Due to Abhyas,he has got knoweledge about reasoning and confidence.My son has improved his vocabulary because of Abhyas.Teacher have very friendly atmosphere also.
Manish Kumar
10thMy 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.
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7thAbhyas 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.
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Prisha Gupta
8thA 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.
Archit Segal
7thMy experience with Abhyas Academy has been very good. When I was not in Abhyas whenever teacher ask questions I could not speak it confidently but when I came in Abhyas, my speaking skills developed and now I am the first one to give the answer of teachers question.
Upmanyu Sharma
7thThird consective year,my ward is in Abhyas with nice experience of admin and transport support.Educational standard of the institute recumbent at satisfactory level. One thing would live to bring in notice that last year study books was distributed after half of the session was over,though study ...
