ECONOMICS
COMPOUND INTEREST
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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A = P(2+r)t
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I= Prt
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A2 + B2 = C2
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A = P(1+r)t
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Detailed explanation-1: -The formula for calculating compound interest is P = C (1 + r/n)nt – where ‘C’ is the initial deposit, ‘r’ is the interest rate, ‘n’ is how frequently interest is paid, ‘t’ is how many years the money is invested and ‘P’ is the final value of your savings.
Detailed explanation-2: -Simple Interest Formula Simple interest is calculated with the following formula: S.I. = P × R × T, where P = Principal, R = Rate of Interest in % per annum, and T = Time, usually calculated as the number of years. The rate of interest is in percentage r% and is to be written as r/100.
Detailed explanation-3: -The interest on a loan or deposit calculated based on the initial principal, and the collective interest from previous periods is called compound interest. It is basically ‘interest earned on money that was previously earned as interest’.
Detailed explanation-4: -Using the interest rate formula, we get the interest rate, which is the percentage of the principal amount, charged by the lender or bank to the borrower for the use of its assets or money for a specific time period. The interest rate formula is Interest Rate = (Simple Interest × 100)/(Principal × Time).