Basic Formulas of Compound Interest
The following are the formulas relevant to Compound Interest(C.I.) questions:
| S.No | To Calculate | Formulas |
|---|---|---|
1 |
Compound Interest Annually |
(P(1 + R/100)^N) - P |
2 |
Compound Interest Half Yearly |
(P(1 + R/(2*100))^2N) - P |
3 |
Compound Interest Quarterly |
(P(1 + R/(4*100))^4N) - P |
4 |
Rule of 72 (or) Doubling time |
72 / Rate of Interest (years) |
Where
P - Principal
N - Number of Years/Months/Days
R - Rate on Interest
T - Time (Days/Months/Years)
Quick Tip: Do you know? You can learn Compound Interest formulas quickly if you first understand the fundamental concepts of Compound Interest.
FAQsFAQs
How do you benefit from learning Compound Interest formulas?
One of the significant benefits of understanding Compound Interest formulas is the capability to quickly and accurately address simple formula-based questions.
How to remember Compound Interest formulas for a longer time?
Following are the techniques you can use to memorise Compound Interest formulas:
For a start, you can start understanding theconcepts of the Compound Interest. It will help you find out why a formula is used.
Keep a separate piece of paper and write down each formula on the Compound Interest topic you need to memorise.
Write down and examine each Compound Interest formula, but this time with intervals. Write the equation, then take a 2-minute break to think about it before writing it again.
Your memory is more likely to associate with the formula you want to remember if you use it more often. Solve the problems employing the formula.
Visualise and repeat out loud the formula occasionally. Create Compound Interest formulas flashcards to help with this. You can also use these flashcards while practicing the Compound Interest questions.
The formula should be written down and posted somewhere you will see daily. They'll be subconsciously imprinted into your memory.
How conceptual understanding of Compound Interest topic helps in remembering its formulas?
Conceptual understanding will help you to make sense of the Compound Interest formulas. Conceptual understanding is concentrated on describing why things happen as opposed to how to make them happen. They help you understand the true motive for employing the Compound Interest formulas.
