Compound Interest Questions Answers Formulas, Tips and Tricks

• 1. Compound Interest Formula and Facts

  
  

  Let Principal = P , Rate = R % per annum and Time = n years.
  
  1. Annual Compound Interest Formula:
  \begin{aligned}
  Amount = P\left( 1 + \frac{R}{100} \right)^n \\
  \end{aligned}
  
  2. Half Yearly Compound Interest Formula:
  When interest is compounded half yearly, then
  
  \begin{aligned}
  Amount = P\left( 1 + \frac{\frac{R}{2}}{100} \right)^{2n} \\
  \end{aligned}
  
  3. Quarterly Compound Interest Formula:
  When interest is compounded Quarterly, then
  \begin{aligned}
  Amount = P\left( 1 + \frac{\frac{R}{4}}{100} \right)^{4n} \\
  \end{aligned}
  
  4. When interest is compounded Annually but time is in fraction, say \begin{aligned}5\frac{2}{7} years \end{aligned}
  
  then Amount will be,
  
  \begin{aligned}
  Amount = P\left( 1 + \frac{R}{100} \right)^5 \times \left( 1 + \frac{\frac{2}{7}R}{100} \right)
  \end{aligned}
  
  5. When Rates are different for different years, say R1%, R2%, R3% for 1st, 2nd and 3rd year respectively.
  
  Then Amount will be,
  \begin{aligned}
  Amount = P\left( 1+\frac{R1}{100} \right) \left( 1+\frac{R2}{100} \right) \left( 1+\frac{R3}{100} \right)
  \end{aligned}
  
  6. Present worth of Rs. x due n years hence will be:
  
  \begin{aligned}
  \text{Present Worth} = \frac{x}{\left(1+\frac{R}{100}\right)^n}
  \end{aligned}

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Compound Interest Questions Answers