What Is The Formula Of Compound Interest In Maths Complete Guide

And by rearranging that formula see Compound Interest Formula Derivation we can find any value when we know the other three. The compound interest formula is A P1rn to the power of nt Compounding Interest Pros and Cons. So after adding the interest amount to your base amount your new total amount is A 1 A 0 p 100 A 0 1 p 100 A 0.

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.

To understand the compound interest we need to do its Mathematical calculation. Compound interest The difference between the two is that simple interest is a fixed amount of interest that is added on every year. A P 1 r4 1004n A P 1 r 4 100 4 n While calculating the compound interest the rate of interest and each time period must be of the same duration. To calculate compound interest we need to know the amount and principal.