ECONOMICS
COMPOUND INTEREST
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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interest rate
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ending balance
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number of years of the loan
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number of times interest iscompounded in a year
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Detailed explanation-1: -The formula for compound interest is A=P(1+rn)nt, where A represents the final balance after the interest has been calculated for the time, t, in years, on a principal amount, P, at an annual interest rate, r. The number of times in the year that the interest is compounded is n.
Detailed explanation-2: -Compound interest is an interest on principal with simple interest. It usually calculated by the formula, CI=P(1+r/100)^t –1. Where CI=Compound Interest, P=Principal, r=rate and t=time.
Detailed explanation-3: -P stands for principal; i stands for interest; n stands for the number of compounding periods.
Detailed explanation-4: -Daily Interest Rate: Ending Investment = Start Amount * (1 + Interest Rate) ^ n. To calculate daily compound interest, the interest rate will be divided by 365, and the number of years (n) will be multiplied by 365. Compounded Monthly: CI = P(1 + (r/12) )12t – P.