ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -But interest can be compounded more often. Some common compounds include compounded semiannually (twice per year), quarterly (four times per year), monthly (12 times per year), weekly (52 times per year), or even daily (365 times per year).

Detailed explanation-2: -Weekly Compounding Some savings and investment accounts compound weekly instead of daily. Instead of dividing your annual interest rate by 365, you would divide by 52. At the end of one week, your new balance would be $5, 004.81 and at the end of a year, it would be $5, 256.23.

Detailed explanation-3: -Compound interest is calculated by multiplying the initial loan amount, or principal, by the one plus the annual interest rate raised to the number of compound periods minus one. This will leave you with the total sum of the loan including compound interest.

Detailed explanation-4: -This means that interest is added weekly to the account. And as there are 52 weeks in the year, near enough, this means that interest is added 52 times per year.

Detailed explanation-5: -If interest is compounded yearly, then n = 1; if semi-annually, then n = 2; quarterly, then n = 4; monthly, then n = 12; weekly, then n = 52; daily, then n = 365; and so forth, regardless of the number of years involved.