How do you solve compound interest question with example? - Answers

Compound Interest is the interest which gets compounded in Specified time periods.. The formula for solving Compound Interest problems is as follows: A=P(1+R/100)n Where, A= Amount after Including Compound Interest P= Principle R= Rate % n= Time Period For Calculating Compound Interest: CI=A-P Where, CI= COmpound Interest A= Amount P= Principle For Eg: If Rs 1000 is lend @ 10% Compounded Anually for 2 years, then calculation will be done as follows: A= 1000 (1+10/100)2 = 1000 (1.1)2 = Rs 1210 & Compound Interest will be A-P i.e. Rs 1210-1000= Rs 210. Also, Whenever Compounded Half Yearly or Compounded Quarterly is given, the rate will be divided by 2 & 4 respectively & time period will be multiplied by 2 & 4 respectively. For Eg: if in the above eg, Compounded Half yearly is given, then take R= 5%, n = 4 years (4 half years in 2 years) & if Compounded Quarterly is given, then, take R= 2.5%, n= 8 (8 quarters in 2 years)