In order to calculate the value of the investment after the period of 3 years annual compound interest formula will be used. That was you can imagine your deposit entering your second year then you get plus 10 on that not 10 on your initial deposit. A P1rn nt CI A-P Where CI Compounded interest A Final amount P Principal t Time period in years n Number of compounding periods per year r Interest rate.
In this method we sum up the interest earned in the previous years to the initial principal thus increasing the principal amount on which the interest for the next period is charged.
A P 1 r n n t A 1 000 000 1 06 12 12 5 A 1 000 000 1 0005 12 5 A 1 000 000 1005 60 A 1 348 85015. That was you can imagine your deposit entering your second year then you get plus 10 on that not 10 on your initial deposit. In this method we sum up the interest earned in the previous years to the initial principal thus increasing the principal amount on which the interest for the next period is charged. 5 points pops150 Asked 05182018.