Published: 08 Aug 2019

Compound interest (or compounding interest) is interest calculated on the initial principal, which also includes all of the accumulated interest of previous periods of a deposit or loan.

**P** = principal amount (the initial amount you borrow or deposit)

**r** = annual rate of interest (as a decimal)

**t** = number of years the amount is deposited or borrowed for.

**A** = amount of money accumulated after n years, including interest.

**n** = number of times the interest is compounded per year

1. When interest is compound Annually :

2. When interest is compounded half-yearly :

3. When interest is compounded quarterly :

4. When interest is compounded annually, but time is in fraction, say 4 years :

5. When rates are different for different years, say R_{1}%, R_{2}% and R_{3}% for 1^{st}, 2^{nd} and 3^{rd}year respectively.

Wherever the term compound interest is used without specifying the period in which the interest is compounded, it is assumed that interest is compounded annually.

**Compound Interest (CI) = A – P**

Simple Interest and Compound Interest for 1 year at a given rate of interest per annum will be equal.

https://gyangossip.com/quantitative-aptitude/mock-test/T5029

https://gyangossip.com/quantitative-aptitude/mock-test/T10857