After a specified period, the difference between the amount and the money borrowed is called the Compound Interest( C.I ) for that period.
Principal = P
Rate = R% per annum
Time = n years.
Compound Interest: (Amount – Principal)
Amount= P × (1 + R / 100)n
- When the interest is compounded K times a year, Amount= P( 1 + R / K×100)kt
- When the interest is paid half yearly, say at r%per annum compound interest, then the amount after t years is given by: P( 1 + R / 2×100)2t
- Similarly, if the interest is paid quarterly, say at r% per annum compound interest, then the amount due after t years is given by: P( 1 + r / 4 × 100)4t
- Under the method of equated instalments, the value of each instalment is the same.
Equal Annual Instalment under
(a) Simple Interest, x = 2P(100 + nr) n[200 + (n – 1)r]
(b) Compound Interest, x = Pr / 100 [1 – (100/100 + r) n ]