'Know Day of Born '   '11th BPS Expected Basic Pay '   'PPF Investors: इस जानकारी को पढ़े और मित्रों के साथ शेयर करें'   'FD-RD-Crorepati-ELSS-SIP Calculator: In one Page'   'Download RTGS/NEFT Fillable Form'   'NSE/BSE Index Date wsie'   'NPS Calculator'   'Your Loan Repayment Details'   'Calculate LTCG on Shares / MF'   'PPF Calculator'   'Family Pension Calculator'   'PWA Benefits to Users'   'My Weight-BP-Sugar Records'   'My PPF Account In My Pocket'   'Calculate Your PPF Withdrawal Amount'   'Fillable Pay In Slip - Auto Amount in Words & Cash Details & '   'Income Tax Calclator FY 1819'   'Hindi English Translation Practice Exercises'   'SSY Calculator'   'Flexi Fixed Deposit Calculation - Interest/TDS'   'Calculate Your Current FY PPF Interest'   'Bankers Expected DA'    'Pensioners Expected DA'   'PPF vs Recurring Deposit'   'Crorepati Calculator'   'ELSS Return & Net Gains for Tax Payer'   'Income Tax Slabs'   'Deposit Maturity Value Calculator'   'Challan 280 (In Fillable Format)'   'Compare Two Loans Interest Payment'   'Recurring Deposit Calculator'   'Letter Writing Helping Sentences'   'English Confusing Words'   'Calculate Your PPF Due Date'   'List of Bank Holidays Statewise'   'Cash Totalling & Tally Cash Position'   'Nifty Bank Date wsie from 15000'   'ELSS v/s PPF v/s RD Calculator'   ' PPF Scheme Features'  
Share this page with friends / groups

Compound Interest Formula and Facts

What is Compound Interest?

Interest calculated on the initial principal and also on the accumulated interest of previous periods of a deposit or loan. Compound interest can be thought of as "interest on interest," and will make a deposit or loan grow at a faster rate than simple interest, which is interest calculated only on the principal amount. The rate at which compound interest accrues depends on the frequency of compounding; the higher the number of compounding periods, the greater the compound interest.

Let Principal = P , Rate = R % per annum and Time = n years.
  1. Annual Compound Interest Formula:
    Amount = P(1+R/100)n

    Note- if interest is calculated annually, then compound interest is equal to simple interest

  2. Half Yearly Compound Interest Formula: When interest is compounded half yearly, then
    Amount = P[1+(R/2)/100]2n

    Note-When the interest is compounded (interest calculated and added to principal) half yearly, then the rate will be half and time will be twice.

  3. Quarterly Compound Interest Formula:
    When interest is compounded Quarterly, then
    Amount = P[ 1+(R/4)/100]4n

    Note-when the interest is compounded quarterly, then rate will be quarter and time will be 4 times.

    Note-When the interest is compounded monthly,

    then A=P{1+(r/1200)}12n

  4. When interest is compounded Annually but time is in fraction, say 3(2/5)years.
    then Amount will be,
    Amount = P(1+R/100)3 x (1+(2R/5)/100)
  5. When Rates are different for different years, say R1%, R2%, R3% for 1st, 2nd and 3rd year respectively. Then Amount will be,
  6. Present worth of Rs. x due n years hence will be:
    Present Worth = x/(1+(R/100))n