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  • CH 2 - Compound Interest

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    Deepika Mohanbabu
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    The document discusses different types of interest earned on money kept in a bank. It explains simple interest, which is calculated on the principal only, and compound interest, which is calculated on the principal and previously earned interest. The key difference is that compound interest is calculated periodically on the sum of the principal and previously accumulated interest, allowing interest to earn interest, whereas simple interest is only calculated on the original principal. An example is provided to demonstrate the calculation of compound interest over three years with a 5% interest rate.

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    Ch 2 - Compound Interest

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    The document discusses different types of interest earned on money kept in a bank. It explains simple interest, which is calculated on the principal only, and compound interest, which is calculated on the principal and previously earned interest. The key difference is that compound interest is calculated periodically on the sum of the principal and previously accumulated interest, allowing interest to earn interest, whereas simple interest is only calculated on the original principal. An example is provided to demonstrate the calculation of compound interest over three years with a 5% interest rate.

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    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
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    4 views11 pages

    CH 2 - Compound Interest

    Uploaded by

    Deepika Mohanbabu
    The document discusses different types of interest earned on money kept in a bank. It explains simple interest, which is calculated on the principal only, and compound interest, which is calculated on the principal and previously earned interest. The key difference is that compound interest is calculated periodically on the sum of the principal and previously accumulated interest, allowing interest to earn interest, whereas simple interest is only calculated on the original principal. An example is provided to demonstrate the calculation of compound interest over three years with a 5% interest rate.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
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    COMMERCIAL

    MATHEMATICS
    Where do we keep our
    money ?
    Why do we keep money
    in Bank?
    What is Interest
    earned?
    What is Simple
    Interest?
    How is Simple Interest
    calculated?
    How is Simple Interest
    calculated?
    Compound Interest
    How does compound interest differ from Simple
    interest?
    How is Compound Interest
    calculated? . 125
    55 P = 1102.5 +
    I=
    .5
    55.125
    52
    I= P = 1050 + 52.5 =1157.625
    =1102.5 After 3rd year
    P = 1000 + 50
    = 1050 R=5%
    After 2nd year
    50 R=5%
    I=
    After 1st
    P = 1000 year
    R=5%

    R=5%
    Start

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