Compound Interest Formulas


Compound Interest is a method of determining the interest or fee of borrowing some money assets.
Compound interest similar to Simple Interest , But it is different from simple interest because in Compound interest the unpaid interest is also added to principal due. And thus In compound interest Interest is also periodically compounded into principal.

Some Important Formulas Related to Compound Interest are given below.

Compound Interest Formulas:


Please note that: The full form of symbols which are abbreviated in formulas below are:

“P” = Compound Principal

“C.I.” = Compound Interest

“R” = Compound Interest rate per annum

“T” = Total time

“A” = compound amount

1. When the Interest is compounded annually , then the Compound interest can be calculated using the formula:

C.I. = P \left(\left(1+ \dfrac{R}{100}\right)^T - 1\right)

2. When the interest is compounded semi-annually then , Compound Interest can be calculated using the formula:

C.I. = P \left(\left(1+ \dfrac{R}{200}\right)^{2T} - 1\right)

3. When the interest is compounded monthly then , Compound Interest can be calculated using the formula:

C.I. = P \left(\left(1+ \dfrac{R}{1200}\right)^{12T} - 1\right)

4. When , The time period is not in exact years , For example if it is “Y” years and “M” months , then the Compound Interest can be found using the formula:

C.I. = P \left(\left(1+ \dfrac{R^Y}{100}\right) \times \left( 1+ \dfrac{M \times R}{1200}\right) - 1\right)

5. If the rate of interest is not always constant instead different every year , For example: if it is R1 for first year , R2 for second year and R3 for third year , the the compound interest can be found by using the formula:

C.I. = P \left[ \left(1+\dfrac{R1}{100}\right) \left(1+\dfrac{R2}{100}\right) \left(1+\dfrac{R3}{100}\right) - 1\right]

6. Compound Amount Can be calculated by using this formula:

C.A. = P\left[\left(1+\dfrac{R}{100}\right)^T\right]

7. If the value of an asset grows by “R”% per annum , “V” is the initial value of the asset then after “T” years the value of asset will be:

=P\left[\left(1+\dfrac{V}{100}\right)^T\right]

8. If the value of an asset depreciates by “R”% per annum , “V” is the initial value of the asset then after “T” years the value of asset will be:

=P\left[\left(1-\dfrac{V}{100}\right)^T\right]



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