## Compound Interest

Money is said to be lent at compound interest if the interest is not paid as soon as it falls due but is added to the principal after a fixed period, so that the amounts at the end of the period becomes the principal for the next period.

## Compound Interest Terms

P = Principal.

R = Rate of interest (%).

T = Time.

## Compound Interest Formulas

Amount = Principal + Interest.

Compound interest = Amount – P

## Formula: To calculate Compound Interest Annually

 Amount for compound interest = P 1 + R T 100
or
 Compound interest = P  1 + R T – 1 100

## Formula: Compound Interest is Payable Half-Yearly

 Amount = P 1 + ( R / 2 ) 2T 100

## Formula: Compound Interest is Payable Quarterly

 Amount = P 1 + ( R / 4 ) 4T 100

## Formula: Compound Interest is Payable Annually but time is in Fraction

 Let, Time = 5 2 years. 3
 Amount = P 1 + R 5 X 1 + (2/3) R 100 100

## Formula: If Compound Interest rates for Successive Years are Different

Let, r1, r2, r3…are the rates for successive years.

 Amount = P 1 + r1 X 1 + r2 X 1 + r3 100 100 100