Aptitude Compound Interest


Compound interest is the addition of interest to the principal sum of a loan or deposit, or in other words, interest on interest. Compound interest is standard in finance and economics.

Formula

Let Principal = P, Rate = R% per annum, Time = n years.

  1. When interest is compound Annually:

    Amount = P(1+
    R / 100
    )n
  2. When interest is compounded Half-yearly:

    Amount = P[1+
    (R/2) / 100
    ]2n
  3. When interest is compounded Quarterly:

    Amount = P[1+
    (R/4) / 100
    ]4n
  4. When interest is compounded Annually but time is in fraction, say 3
    2 / 5
    years.
    Amount = P[1+
    R / 100
    ]3 x (1+
    2 / 5
    R
    / 100
    )
  5. When Rates are different for different years, say R1%, R2%, R3% for 1st, 2nd and 3rd year respectively.
    Then Amount = P(1+
    R1 / 100
    ) (1+
    R2 / 100
    ) (1 +
    R3 / 100
    )
  6. Present worth of Rs. x due n years hence is given by:
  7. Present Worth =
    x / (1+
    R / 100
    )






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