Compound Interest Calculator Compound Interest Calculator In mathematical definition, an interest can be defined as an amount which is earned from the borrowed money given to the other person. Interest is a mathematical that can be consider as an amount in terms of money, which is paid by the borrower to the money lender. In the real life when we deposit the money into the bank then bank paid the extra amount to the account holder on the behalf of their deposited amount. That amounts are known as interest amount. The calculations of interest are pre-decided by the bank to the customers. Here in the above case the customer lending the money to the bank. In our general life sometime we need the money to fulfill our basic needs then at that time we get the loan from the bank to fulfill our requirements. After that we have to payback this amount with the interest. The calculation of interest is predefined by the bank before giving the loan. When money is borrowed either by the customer or by bank from the other firms, that money Know More About Z Table Math.Tutorvista.com
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are known as principal. On the given principal a particular amount will be paid for a particular time period are known as Interest rate. In the banking sector interest can be defined as a risk amount that will be paid to the customer. In the banking sector’s there are various way to calculate the amount of interest by two ways. ( a) Simple interest ( b) Compounded interest Here we are going to discussing about the compound interest calculator. Compound interest calculator is a calculator that calculates the amount of interest in a multiplicative form. It means to say that in the simple interest the calculation of amount of interest is calculated on the initial amount of loan or principal amount. But in the case of compound interest calculator the amount of interest is calculated on the principal amount only first year. After that this amount can be calculated on the principal amount plus the interest amount. Here we show you the process of calculating the amount of interest by the compound interest calculator. For calculating the compound interest we use the formula for calculating the interest amount. Formula for compound interest formula: principal ( 1 + rate)time In the above formula principal amount refers to initial loan amount. Rate refers to the agreement of the interest amount in the form of percentage. Time refers to the duration of time for the borrowed amount or a loan. Now we show you the process of calculating the compound interest amount by the following given example: Learn More Differential Equations Math.Tutorvista.com
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Example: Suppose Harry get the loan of amount $ 15000 from a bank. The bank charges the annual interest rate of 4 percent on the basis of compound interest. Now what will be the amount after 2 years? Solution: in the above question given that the principal amount is $15000 The rate of interest amount is 4 percent which is compound annually. The time duration is given that which is 2 years. So, the total amount after two years is: $ 15000 ( 1 + 4 / 100 )2 In the above formula we can see that we apply the different amount on the compound interest formula. Now we solve the problem in the following manner: $ 15000 ( 1 + 4 / 100 )2 $15000 * 104/ 100 * 104 / 100 Now the total amount after two years with interest is $16422
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