COMPOUND INTEREST

E. PARKAVI
16-EDM-22
B.Ed I YEAR
MATHEMATICAL EDUCATION
INTRODUCTION

• How many of you have been to bank with

your parents?
• What have you observed in bank?
• What is the main purpose of bank?
INTRODUCTION
• Saving money i.e. depositing rupees.
INTRODUCTION

•Cash withdraw
•Payment
purposes like bill,
loans etc.,
Topic introduction
• Why we need to deposit money in bank?
• We could also keep it in our home.
• What is the reason behind depositing money in
bank?
INTRODUCTION
INTRODUCTION

Simple interest:
When interest is paid only on the principle alone
Is known as simple interest.
Simple Interest
Compound Interest

• The interest which is paid on

the principle as well as on the
accrued interest is called as
compound interest.
Explanation
• Consider vinay has borrowed Rs.50,000 from
bank with 4% rate of interest for two years.
• Vinay has to pay Rs.2000 as interest in the first
year.
• If he couldn’t pay it then the interest will be
added to the principle i.e. sum = principle +
interest
• Sum = Rs.50000+ Rs.2000 = Rs.52000.
Explanation

• Now vinay has to pay interest in the

second year with Rs.52000 as new
principle.
• This way of calculating interest is known
as compound interest.
COMPOUND INTEREST
Formula For Compound Interest
Calculation Of Compound Interest In Different
Ways

COMPOUND
INTERESET

COMPOUNDED COMPOUNDED COMPOUNDED

QUARTERLY HALF YEARLY ANNUALLY
When compounded quarterly
When compounded half-yearly
When compounded annually
A problem in compound interest
Real life applications
These are some features which gives profit
• Provident fund
• Bank deposits
Negative features
• Credit card bills
• Loans
Conclusion