Compound Interest Concept shortcuts
Compound Interest:
As We Discussed From Simple Interest. The Extra amount paid to the recipients
is called Interest. Here, we are going to discuss compound interest, which means The interest will be calculated on the principal and also on the Interest.
Where:
A = Final amount (principal + interest)
P = Principal (initial investment)
r = Annual interest rate
n = Number of times interest is compounded per year
t = Time (in years)
If you want the interest earned only (excluding the principal), it is:
$$
I = A - P = P \left( \left(1 + \frac{r}{n}\right)^{nt} - 1 \right)
$$
For a detailed explanation of Compound Interest, check out the video below.
Since writing every fraction here isn’t possible, I’ve explained each step very clearly in the video.
📥 Download the PDF notes and practice the questions.
Compound Interest – Class 1
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Compound Interest – Class 2
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