Compound Interest Calculator with Tutorial
Compound Interest Calculator
Have you ever wondered what exactly does it mean by compound interest? Here in this tutorial, we will discuss about compound interest and things you should understand in this regard. Sometimes it so happens that the borrower and the lender agree to fix up a certain unit of time, say yearly or half yearly or quarterly or even monthly in some cases to settle the previous account. In such cases, the amount after first unit of time becomes the principal for the second unit , the amount after second unit becomes the principal for the third unit and so on. Whenever you are dealing with a bank loan or any finance related interest problem, concept of compounding would be of use.
After a specified period, the difference between the the final amount and the money borrowed is called compound interest (C.I) for that particular period.
So it is evident that compound interest calculated similar to the simple interest but the principal amount keeps changing according to the agreement of compounding. Lets get to the derived formula for better understanding.
Important Facts and Formulae
Let principal amount=P, Rate of interest=R% per annum, Time=n years.
I. When interest is compounded Annually :
Amount S= P(1+R/100)n
II. When interest is compounded Half-yearly
S=P(1+R/200)2n
III. When interest is compounded Quarterly,
S=P(1+R/400)4n
IV. When interest is compounded annually but time is in fraction, say 2.5 years
S=P(1+R/100)3 x (1+1/2*R/100)
V. When rates are different for different years say R1%, R2%, R3% for 1st, 2nd and 3rd year respectively
