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|
|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
|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|