The sooner you start to save, the more you'll earn with compound interest. Show
How compound interest worksCompound interest is the interest you get on:
For example, if you have a savings account, you'll earn interest on your initial savings and on the interest you've already earned. You get interest on your interest. This is different to simple interest. Simple interest is paid only on the principal at the end of the period. A term deposit usually earns simple interest. Save more with compound interestThe power of compounding helps you to save more money. The longer you save, the more interest you earn. So start as soon as you can and save regularly. You'll earn a lot more than if you try to catch up later. For example, if you put $10,000 into a savings account with 3% interest compounded monthly:
Compound interest formulaTo calculate compound interest, use the formula: A = P x (1 + r)n A = ending balance How to calculate compound interestTo calculate how much $2,000 will earn over two years at an interest rate of 5% per year, compounded monthly: 1. Divide the annual interest rate of 5% by 12 (as interest compounds monthly) = 0.0042 2. Calculate the number of time periods (n) in months you'll be earning interest for (2 years x 12 months per year) = 24 3. Use the compound interest formula A = $2,000 x (1+ 0.0042)24 Lorenzo and Sophia compare the compounding effect Lorenzo and Sophia both decide to invest $10,000 at a 5% interest rate for five years. Sophia earns interest monthly, and Lorenzo earns interest at the end of the five-year term. After five years:
Sophia and Lorenzo both started with the same amount. But Sophia gets $334 more interest than Lorenzo because of the compounding effect. Because Sophia is paid interest each month, the following month she earns interest on interest. ClearTax offers taxation & financial solutions to individuals, businesses, organizations & chartered accountants in India. ClearTax serves 2.5+ Million happy customers, 20000+ CAs & tax experts & 10000+ businesses across India. Efiling Income Tax Returns(ITR) is made easy with ClearTax platform. Just upload your form 16, claim your deductions and get your acknowledgment number online. You can efile income tax return on your income from salary, house property, capital gains, business & profession and income from other sources. Further you can also file TDS returns, generate Form-16, use our Tax Calculator software, claim HRA, check refund status and generate rent receipts for Income Tax Filing. CAs, experts and businesses can get GST ready with ClearTax GST software & certification course. Our GST Software helps CAs, tax experts & business to manage returns & invoices in an easy manner. Our Goods & Services Tax course includes tutorial videos, guides and expert assistance to help you in mastering Goods and Services Tax. ClearTax can also help you in getting your business registered for Goods & Services Tax Law. Save taxes with ClearTax by investing in tax saving mutual funds (ELSS) online. Our experts suggest the best funds and you can get high returns by investing directly or through SIP. Download ClearTax App to file returns from your mobile phone.
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ML Aggarwal Solutions Class 9 Mathematics Solutions for Compound Interest Exercise 2.2 in Chapter 2 - Compound InterestQuestion 24 Compound Interest Exercise 2.2 (i) In what time will ₹ 1500 yield ₹ 496.50 as compound interest at 10% per annum compounded annually? (ii) Find the time (in years) in which ₹ 12500 will produce 3246.40 as compound interest at 8% per annum, interest compounded annually. Answer: (i) It is given that Principal (P) = ₹ 1500 CI = ₹ 496.50 So the amount (A) = P + SI Substituting the values = 1500 + 496.50 = ₹ 1996.50 Rate (r) = 10% p.a. We know that Here Time n = 3 years (ii) It is given that Principal (P) = ₹ 12500 CI = ₹ 3246.40 So the amount (A) = P + CI Substituting the values = 12500 + 3246.40 = ₹ 15746.40 Rate (r) = 8% p.a. We know that By further calculation Here Period = 3 years
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What is the compound interest on 12500?Detailed Solution:
CI = 12500(1 + 0.12/1)1 × 2 - 12500 = 12500(1.12)2 = 15680 - 12500 = 3180.
How do you calculate compound interest compounded quarterly?Simply put, you calculate the interest rate divided by the number of times in a year the compound interest is generated. For instance, if your bank compounds interest quarterly, there are 4 quarters in a year, so n = 4. This result must be multiplied to the power of the deposit period.
How do you calculate 9 month CI?Solution : Here the principal is R. 6250 <br> The rate of compound interest is 10%. Time `=9` months` =9/12` year `=3/4` year.
What is the compound interest of 10000 for 3 years?=13310–10000=₹ 3310.
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