Explain the calculation of compound interest by example.

Answer»

Calculation of Monthly Compound Interest : In calculation of compound interest, interest calculated on amount of principal and interest.

Formula will be :
Example: If Rs 10,000 invested for 10 year on the 5% compound interest. Interest is calculated on monthly.

Principal Amount x (1 + Interest/compounding period in year) A (Compounding period x years)
Show by following picture :

	B₇	*fx = B₂(1 +B₃/B₄) ^ (B₄B₅)*
	A	B	C
1
2	Principal	10,000
3	Annual Interest Rate	5%
4	Compounding Periods Per Year	12
5	Years	10
6
7	Amount Earned	16,470
8
9

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