Compound Interest: The future value (FV) of an investment of present value (PV) dollars earning interest at an annual rate of r compounded m times per year for a period of t years is:
FV = PV(1 + r/m)mtor
FV = PV(1 + i)n
where i = r/m is the interest per compounding period and n = mt is the number of compounding periods.
One may solve for the present value PV to obtain:
PV = FV/(1 + r/m)mt
Numerical Example: For 4-year investment of $20,000 earning 8.5% per year, with interest re-invested each month, the future value is
FV = PV(1 + r/m)mt = 20,000(1 + 0.085/12)(12)(4) = $28,065.30
Notice that the interest earned is $28,065.30 - $20,000 = $8,065.30 -- considerably more than the corresponding simple interest.
Effective Interest Rate: If money is invested at an annual rate r, compounded m times per year, the effective interest rate is:
reff = (1 + r/m)m - 1.
This is the interest rate that would give the same yield if compounded only once per year. In this context r is also called the nominal rate, and is often denoted as rnom.
Numerical Example: A CD paying 9.8% compounded monthly has a nominal rate of rnom = 0.098, and an effective rate of:
r eff =(1 + rnom /m)m = (1 + 0.098/12)12 - 1 = 0.1025.
Thus, we get an effective interest rate of 10.25%, since the compounding makes the CD paying 9.8% compounded monthly really pay 10.25% interest over the course of the year.
Mortgage Payments Components: Let where P = principal, r = interest rate per period, n = number of periods, k = number of payments, R = monthly payment, and D = debt balance after K payments, then
R = P � r / [1 - (1 + r)-n]
andD = P � (1 + r)k - R � [(1 + r)k - 1)/r]
Accelerating Mortgage Payments Components: Suppose one decides to pay more than the monthly payment, the question is how many months will it take until the mortgage is paid off? The answer is, the rounded-up, where:
n = log[x / (x � P � r)] / log (1 + r)
where Log is the logarithm in any base, say 10, or e.Future Value (FV) of an Annuity Components: Ler where R = payment, r = rate of interest, and n = number of payments, then
FV = [ R(1 + r)n - 1 ] / r
Future Value for an Increasing Annuity: It is an increasing annuity is an investment that is earning interest, and into which regular payments of a fixed amount are made. Suppose one makes a payment of R at the end of each compounding period into an investment with a present value of PV, paying interest at an annual rate of r compounded m times per year, then the future value after t years will be
FV = PV(1 + i)n + [ R ( (1 + i)n - 1 ) ] / i where i = r/m is the interest paid each period and n = m � t is the total number of periods.
Numerical Example: You deposit $100 per month into an account that now contains $5,000 and earns 5% interest per year compounded monthly. After 10 years, the amount of money in the account is:
FV = PV(1 + i)n + [ R(1 + i)n - 1 ] / i =
5,000(1+0.05/12)120 + [100(1+0.05/12)120 - 1 ] / (0.05/12) = $23,763.28
Value of a Bond:
V is the sum of the value of the dividends and the final payment.
You may like to perform some sensitivity analysis for the "what-if" scenarios by entering different numerical value(s), to make your "good" strategic decision.
Replace the existing numerical example, with your own case-information, and then click one the Calculate.
hello HD band Assamese calculate the amount and the compound interest on rupees 5000 in two years if the rate of interest for the successive years be eat % and 10% respectively the solution in the want to calculate the amount and the compound interest on rupees 5000 at means principal is equal to rupees 5000 to hear and rate of interest is on the first year it is 8% per annum and second year it is 10% formula for finding amount equal to
is equal to P bracket 1 + 1 upon 101 plus auto upon hundred Patang values wicket is equal to hear it is 5000 RS 5000 oneplus rate of interest for the first year is 8% and rate of interest for the second year is 10% after solving this week 5000 naked 108 108 close and second bracket 110 upon hundred call 2002 108 102 110/100 after serving this
cricket is equal to rupees 5940 we know that compound interest is equal to amount - principal amount is rupees 5940 and principal money is rupees 5000 compound interest is equal to rupees 942
Question
Find the compound interest for 3 years on Rs 5000, if the rate of interest for the successive years are 8%, 6% and 10% respectively.
Hint:
Find the total amount for 3 successive years then subtract the principal amount from it.
The correct answer is: 1296.4 Rupees
Complete step by step solution:
Given that principal amount P = 5000
Number of years T = 3
Let R1 = 8%,R2 = 6% and R3 = 10%Total amount , …(i)
On substituting the known values in (i), we get
We know that, Compound interest ( CI) = total amount (A) - principal amount (P)
So, Compound interest ( CI) = 6296.4 - 5000 = 1296.4 Rupees
On substituting the known values in (i), we get
So, Compound interest ( CI) = 6296.4 - 5000 = 1296.4 Rupees
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Related Questions to study
Maths-
What annual instalment will discharge a debt of Rs 1092 due in 3 years at 12% simple interest?
Complete step by step solution:
Let the principal amount P = 1092
It is given that T =
2, R = 12%
We have the formula for annual payment …(i)
On substituting the known values in (i), we get
So, 325 Rupees is the annual instalment.
What annual instalment will discharge a debt of Rs 1092 due in 3 years at 12% simple interest?
Maths-General
Complete step by step solution:
Let the principal amount P = 1092
It is given that T = 2, R = 12%
We have the formula for annual
payment …(i)
On substituting the known values in (i), we get
So, 325 Rupees is the annual instalment.
Maths-
What sum of money lent out at 6% for 2 years will produce the same interest as Rs. 1200 lent out at 5% for 3 years.
Complete step by step solution:
We calculate simple interest by the formula, …(i)
where
P is Principal amount, T is number of years and R is rate of interest
Case Ⅰ
Let the sum of money = P
Here, we have
On substituting the values in (i), we get …(ii)
Case Ⅱ
Here, we have
On substituting the values in (i), we get …(iii)
It is given that the interest produced in both the cases is the same.
So, Equate (ii) and (iii)
On equating, we get
rupees.
Hence the sum of money P = 1500 Rupees
What sum of money lent out at 6% for 2 years will produce the same interest as Rs. 1200 lent out at 5% for 3 years.
Maths-General
Complete step by step solution:
We calculate simple interest by the formula, …(i)
where P is Principal amount, T is number of years and R is rate of interest
Case Ⅰ
Let the sum of money = P
Here, we have
On substituting the values in (i), we get
…(ii)
Case Ⅱ
Here, we have
On substituting the values in (i), we get …(iii)
It is given that the interest produced in both the cases is the same.
So, Equate (ii) and (iii)
On equating, we get
rupees.
Hence the sum of money P = 1500 Rupees
Maths-
What sum of money lent out at 5% for 3 years will produce the same interest as Rs. 900 lent out at 4% for 5 years.
Complete step by step solution:
We calculate simple interest by the formula, …(i)
where P is Principal amount, T is number of years and R is rate of interest
Case Ⅰ
Let the sum of money = P
Here, we have
On substituting the values in (i), we get …(ii)
Case Ⅱ
Here, we have
On substituting the values in (i), we get …(iii)
It is
given that the interest produced in both the cases is the same.
So, Equate (ii) and (iii)
On equating, we get
rupees.
Hence the sum of money P = 1200 Rupees
What sum of money lent out at 5% for 3 years will produce the same interest as Rs. 900 lent out at 4% for 5 years.
Maths-General
Complete step by step solution:
We calculate simple interest by the formula, …(i)
where P is Principal
amount, T is number of years and R is rate of interest
Case Ⅰ
Let the sum of money = P
Here, we have
On substituting the values in (i), we get …(ii)
Case Ⅱ
Here, we have
On substituting the values in (i), we get …(iii)
It is given that the interest produced in both the cases is the same.
So, Equate (ii) and (iii)
On equating, we get
rupees.
Hence the sum of money P = 1200 Rupees
Maths-
Find the sum which will amount to Rs. 364.80 at 3 % per annum in 8 years at simple interest
Complete step by step solution:
Let the sum of money = P
We know the formula for total amount = A = P + SI
where A is the total amount, T is the principal amount and R is simple interest.
We know that
where P is Principal amount, T is number
of years and R is rate of interest
So, …(i)
Here, we have
On substituting these values in (i), we get
On further simplifications, we get
Hence the sum of money P = Rs 285.
Find the sum which will amount to Rs. 364.80 at 3 % per annum in 8 years at simple interest
Maths-General
Complete step by step solution:
Let the sum of money = P
We know the formula for total amount =
A = P + SI
where A is the total amount, T is the principal amount and R is simple interest.
We know that
where P is Principal amount, T is number of years and R is rate of interest
So, …(i)
Here, we have
On substituting these values in (i), we get
On further simplifications, we get
Hence the sum of money P = Rs 285.
Maths-
The simple interest on a sum of money at the end of 3 years is of the sum itself. What rate percent was charged?
Complete step by step solution:
Let the sum of money = P
It is given that SI is times the sum itself = P.
We calculate simple interest by the formula,
where P is Principal amount, T is number of years and R is rate of interest
Here, we have
On substituting the known values we get,
On further
simplifications, we have .
The simple interest on a sum of money at the end of 3 years is of the sum itself. What rate percent was charged?
Maths-General
Complete step by step solution:
Let the sum of money = P
It is given that SI is times the sum itself = P.
We calculate simple interest by the formula,
where P is Principal amount, T is number of years and R is rate of
interest
Here, we have
On substituting the known values we get,
On further simplifications, we have .
Maths-
A theatre company uses the revenue function dollars. The cost functions of the production . What ticket price is needed for the theatre to break even?
A theatre company uses the revenue function dollars. The cost functions of the production . What ticket price is needed for the theatre to break even?
Maths-
Rewrite the equation as a system of equations, and then use
a graph to solve.
Hint:
A graph is a geometrical representation of an equation or an expression. It can be used to find solutions of equation.
We are asked to rewrite the equation as system of equations and graph them to solve it.
Step 1 of 3:
Equate each side of the equation to a new variable, y:
Here we get two points where both the graphs intersect each other. The points are (-8, 0) and (-3, -7.5). Thus, we can say that the solutions
to the given set of equation are the points of intersection.
Note:
When you graph a quadratic equation find three coordinate points to get the curve. But when it is a linear equation, just two points would give the path of the line.
Rewrite the equation as a system of equations, and then use a graph to solve.
Maths-General
Hint:
A graph is a geometrical representation of an
equation or an expression. It can be used to find solutions of equation.
We are asked to rewrite the equation as system of equations and graph them to solve it.
Step 1 of 3:
Equate each side of the equation to a new variable, y:
Here we get two points where both the graphs intersect each other. The points are (-8, 0) and (-3, -7.5). Thus, we can say that the solutions to the given set of equation are the points of intersection.
Note:
When you
graph a quadratic equation find three coordinate points to get the curve. But when it is a linear equation, just two points would give the path of the line.
Maths-
Rewrite the equation as a system of equations, and then use a graph to solve.
Thus, the
solutions are (0, 0) and (1, -14)
Step 3 of 3:
Plot the points and join them to get the respective graph.
Here, there is just one point where both the graphs intersect each other. The point is (4, -8). Thus, we can say that the point is the solution of the set of equation.
Note:
When you graph a quadratic equation find three coordinate points to get the curve. But when it is a linear equation, just two points would give the path of the line.
Rewrite the equation as a system of equations, and then use a graph to solve.
Maths-General
Thus, the solutions are (0, 0) and (1, -14)
Step 3 of 3:
Plot the points and join them to get the respective graph.
Here, there is just one point where both the graphs intersect each other. The point is (4, -8). Thus, we can say that the point is the solution of the set of equation.
Note:
When
you graph a quadratic equation find three coordinate points to get the curve. But when it is a linear equation, just two points would give the path of the line.
Maths-
Find the simple interest on Rs. 6500 at 14% per annum for 73 days?
Complete step by step solution:
We calculate simple interest by the formula,
where P is
Principal amount, T is number of years and R is rate of interest
Here, we have
On substituting the known values we get,
On further simplifications, we have rupees.
Thus, SI = 182 Rupees.
Find the simple interest on Rs. 6500 at 14% per annum for 73 days?
Maths-General
Complete step by step solution:
We calculate simple interest by the formula,
where P is Principal amount, T is
number of years and R is rate of interest
Here, we have
On substituting the known values we get,
On further simplifications, we have rupees.
Thus, SI = 182 Rupees.
Maths-
Rewrite the equation as a system of equations, and then use a graph to
solve.
Here, they graphs intersect at two point; (-1 -1) and (0.5, 2). This means that the solutions of the system of equation are (-1 -1) and (0.5, 2).
Note:
Solutions of a set of equation can be found by graphing the equations and finding the intersecting points. The points where they intersect are the solutions.
Rewrite the equation as a system of equations, and then use a graph to solve.
Maths-General
Here,
they graphs intersect at two point; (-1 -1) and (0.5, 2). This means that the solutions of the system of equation are (-1 -1) and (0.5, 2).
Note:
Solutions of a set of equation can be found by graphing the equations and finding the intersecting points. The points where they intersect are the solutions.
Maths-
Rewrite the equation as a system of equations, and then use a graph to solve.
The required points are: (-1, 4),(1, 4) and (0, 0)
Step 3 of 3:
Draw the graph of the set of equations, corresponding to the found points.
It is clear that there are no points of
intersection. Hence, the given equation has no solution.
Note:
Maximum solutions possible for a quadratic equation are two. There are instances where the equation has no solutions as well.
Rewrite the equation as a system of equations, and then use a graph to solve.
Maths-General
The required points are: (-1, 4),(1, 4) and (0, 0)
Step 3 of 3:
Draw the graph of the set of equations,
corresponding to the found points.
It is clear that there are no points of intersection. Hence, the given equation has no solution.
Note:
Maximum solutions possible for a quadratic equation are two. There are instances where the equation has no solutions as well.
Maths-
Find the simple interest on Rs. 8000 at 16 % per annum for 9 months?
Complete step by step solution:
We calculate simple interest by the formula,
where P is Principal amount, T is number of years and R is rate of interest
Here, we have
On substituting the known values we get,
On further simplifications, we have rupees.
Thus, SI = 1000 Rupees.
Find the simple interest on Rs. 8000 at 16 % per annum for 9 months?
Maths-General
Complete step by step solution:
We calculate simple interest by the formula,
where P is Principal amount, T is number of years and R is rate of interest
Here, we have
On substituting the known values we get,
On further simplifications, we have rupees.
Thus, SI = 1000 Rupees.
Maths-
The simple interest on a sum of money at the end of 5 years is of the sum. Find the rate of interest?
Complete step by step solution:
Let the sum of money = P
It is given that times the sum =
We calculate simple interest by the formula,
where P is Principal amount, T is number of years and R is rate of interest
Here, we have , and R = ?
On substituting the known values, we have
On rearranging the above equation, we get
On
further simplifications, we get
At 16% rate of interest, the simple interest on a sum of money at the end of 5 years is of sum Itself.
The simple interest on a sum of money at the end of 5 years is of the sum. Find the rate of interest?
Maths-General
Complete step by step solution:
Let the sum of money = P
It is given that times the sum =
We calculate simple interest by
the formula,
where P is Principal amount, T is number of years and R is rate of interest
Here, we have , and R = ?
On substituting the known values, we have
On rearranging the above equation, we get
On further simplifications, we get
At 16% rate of interest, the simple interest on a sum of money at the end of 5 years is of sum Itself.
Maths-
Find the solution of the system of equations.
y = 2x + 5
Find the solution of the system of equations.
y = 2x + 5
General
Format the sentence into converts Spanish grammar.
"My wife buys a new television for my father”
Explanation:-
Because both pronouns "La" and "le" were used in the sentence, the "le" is changed to a "se" in order to fit.
Format the sentence into converts Spanish
grammar.
"My wife buys a new television for my father”
GeneralGeneral
Explanation:-
Because both pronouns "La" and "le" were used in the sentence, the "le" is changed to a "se" in order to fit.