Compound interest formula – Let us know how is compound interest calculated and what is the formula for compound interest with some compound interest examples. Also, we can solve questions based on the rate of compound interest formula. Learn how to calculate compound interest accurately.
Compound Interest Formula with Different Terms
Amount (A) = P × [ 1 + R/100 ]nT
P= Initial Principal
A= Final Amount
T = Time period
R = Rate of interest
n = Number of times the interest is applied per time period
Compound Interest (CI) = Final Amount (A) – Initial Principal (P)
CI = A – P ⇒ P × [ ( 1 + R/100 )nT – 1 ]
Understand How is CI calculated with an Example Problem
Question1: Â Calculate the amount for Rs. 50000 at 10
Solution: From above formula for amount is A=P[1+R/100]nT Here P=50000, R= 10
A = 50000[1+10/100]1×3 Question2: Calculate the compound interest for Rs. 50000 at 10
Solution: From above formula for the compound interest is CI= A – P= P × [ (1+R/100)nT – 1 ] Here P=50000, R= 10
CI=50000 × [ (1+10/100)1×3 – 1 ] Rate of Interest (R) = [(A/P)1/T – 1 ]
Question: Calculate the annual rate of interest for principal Rs. 25000 which amount to Rs. 100000 for a period of 2 years. Solution: From the above formula for the rate of interest is R = [(A/P)1/T – 1 ]
Here Principal (P) = 25000, Amount (A) = 100000, Time Period (T) = 2 years The annual rate of interest for principal Rs. 25000 which amount to Rs. 100000 for a period of 2 years is 3
Question 1: If the simple Interest for a principle after 2 years at a rate of 10
Solution: here, SI = 4000 Question 2:Â For a principle of 10000 taken for 2years at a rate of 4
Solution: Here the rate of interest is considered as half of the original rate. i, e R/2 Now, the resultant formula for amount is A=P[1+(R/2)/100]2T P = 10000 ⇒10000 × [1+2/100]4 ⇒10000 × [51/50]4 ⇒10,824 Read More
⇒ 50000[11/10]1×3
⇒50000×(11/10)×(11/10)×(11/10)
⇒50×11×11×11
⇒66550
The amount if Rs. 50000 at 10
⇒50000 × [ (11/10)3 – 1 ]
⇒50000 × [ (1331 – 1000)/1000 ]
⇒50000 × [ 331/1000 ]
⇒50 × 331
⇒16500
The compound interest for Rs 50000 at 10
Rate of Compound Interest Formula with ExampleÂ
R = [(100000/25000)1/2Â – 1 ]
⇒[(4)1/2 – 1 ]
⇒[2 – 1 ]
⇒3
Some Compound interest formula Questions and answers
we have the formulas CI = SI × (1 + R/200)
R = 10
T= 2years
Applying the values in the formula
CI = 4000 × ( 1 + 10/200)
⇒ 4000 × ( 21/20 )
⇒ 4200
The time period is considered as twice the original time period I,e 2T
 Here,
T= 2
R= 4
Submitting the values in the equation.
A=10000 × [1+(4/2)/100]2×2
Compound Interest Concepts
Compound Interest Questions