Compound Interest Flashcards
How is compound interest different from simple interest?
Compound interest is the interest earn not only on the principal, but also on all the previous interest earn.
What is the formula for calculating total amount using compound interest
P = Principal
r = compound interest per year
n = number of years
To calculate the compound interest, what must we do?
We subtract the Principal from the Total amount.
Calculate the Total amount from
Principal = $20000
Compound interest rate = 2%
No of years = 3
Calculate the Compound interest from
Principal = $20000
Compound interest rate = 2%
No of years = 3
Compound interest = $21224.16 - $20000
= $1224.16
Calculate the Total amount from
Principal = $25000
Compound interest rate = 2.5%
No of years = 4
Calculate the Compound interest from
Principal = $25000
Compound interest rate = 2.5%
No of years = 4
Compound interest = $27595.32 - $25000
= $2595.32
Calculate the Total amount from
Principal = $30000
Compound interest rate = 1.5%
No of years = 10
Calculate the Compound interest from
Principal = $30000
Compound interest rate = 1.5%
No of years = 10
Compound interest = $34816.22 - $30000
= $4816.22
