MADE BY

MUSKAAN,MEENAL,MANASVI,
AND ASHISH. MATHS PROJECT
TOPIC –
COMPOUND
INTEREST
Compound Interest
INTRODUCTION
WHEN MONEY IS BORROWED ON
SIMPLE INTEREST THEN THE INTEREST
IS CALCULATED UNIFORMALY ON THE
ORIGINAL PRINCIPAL THROUGHOUT
THE PERIOD.
HOWEVER, IN POST OFFICES, BANKS,
AND OTHER COMPANIES WHICH LEND
MONEY ANDACCEPT DEPOSITS, THE
METHOD OF CALCULATING INTEREST IS
QUITE DIFFERENT.
AFTER A CERTAIN SPECIFIED
PERIOD,THE DIFFER -ENCE BETWEEN
THE AMOUNT AND THE MONEY
BORROWED IS CALLED THE
COMPOND
INTEREST(ABBREVIAATED AS CI).
THE FIXED UNIT OF TIME IS THE
CONVERSION PERIOD.
TO FIND CI WHEN WHERE
INTERS -T IS COMPOUNDED
 IN SUCH CASES WHERE INTEREST IS
ANNUALY
COMPOUNDED YEARLY THE
INTEREST ACCURED THE FIRST
YEAR IS ADDED TO THE PRINCIPAL
AND THE AMOUNT SO OBTAINED
BECOMES THE PRINCIPAL FOR THE
SECOND YEAR.
 For example -
FIND THE COMPOUND INTEREST ON RS
25000 FOR 3 YEARS AT 6% PER ANNUM,
COMPOUNDED ANNUALY.

PRINCIPAL FOR FIRST YEAR = RS

25000.
INTEREST FOR THE FIRST YEAR =
RS (25000* 6*1)/100 = RS 1500
AMOUNT AT THE END OF THE FIRST
YEAR = RS(25000+1500)=RS 26500.
TO FIND C.I WHEN INTEREST IS
COMPOUNDED HALF YEARLY .
In such cases if the rate of interest is r %
p.a. then it is cle
-arly (R/2)%per half year. The amount
after 1st year becomes the principal for
next half year and so on.

FOR EXAMPLE -
 Find the compound interest on Rs 5000 for 1 year at 8 % p.a.
compounded half yearly ?
Ans. Rate =4%p.a., time =2 half years, principal = 5000
Interest for the first half year=Rs(5000*4*1/100)= 200
Amount at the end of year=Rs(5000+200) = Rs 5200
Principal for second half year = Rs 5200
Interest for 2nd half =Rs(5200*4*1/100) = Rs 208.
Amount at he end of 2nd half = Rs(5200+208)=Rs5408.
Compound interest = Rs (5408 – 5000)
= Rs 408 ans.
CALCULATING COMPOUND
INTERES –T BY USING
FORMULAE.
The methods of calculating compound
interest is quite long when time is
large so to do it early some formulas
are made in various three cases by
which we could do compound interest
easily and early
So now let us study case 1 -
Case 1 –
When the interest is compounded annually.
P-Rs p , rate=r % p.a. and time=n years
Then the amount A is given by the formula.

A = p(1+r/100)n.
Compound interest = (amount)-(principal)
For example -
Find the amount of Rs 8000 for 3 year compound –
ed annually at 5%p.a. also find C.I ?
Ans.p=Rs8000,r=5%p.a. and n=3 years.
Using formula- A=P(1+R/100)n. we get
A after 3 year=Rs{8000*(1+5/100)3}
A = Rs(8000*21/20*21/20*21/20)=Rs9261
AND COMPOUND INTEREST =Rs(9261-8000)
=Rs 1261 Ans.
 CASE 2 -
When the interest is compound annually but
rates are different for different years.
P=?,t=2years,and the rates of interest be p
%p.a. during the1styear and q%p.a.
during the 2nd year
Amount after 2 years =
Rs{p(1+p/100)*(1+q/100)}.
This formula can be extended for nos of
years .
FOR EXAMPLE -
1.Find the amount of Rs 12000 after 2 year c-
-ompounded annually the rate of interest being
5% p.a. during 1st and 6% during 2nd year find
compound interest too ?
Ans. P=Rs12000p=5%p.a and q=6%p.a.
Using formula- a=p(1=p/100)*(1+q/100)
Amount after 2 years =
Rs {12000*(1+5/100)*(1+6/100)}
Rs(12000*21/20*53/20) = Rs 13356
Compound interest=(13356 - 12000)
=Rs 1356
CASE 3 -
When interest is compounded annually but time is a fraction.

suppose time is in mixed fraction then,

Amount = p*(1+r/100)*(1+3/5*100)

For example -
1.Find the compound interest on Rs 31250
at 8%p.a. for 2¾ years.
Ans. Amount after 2 ¾ years
A=[32150(1+8/100)2*{1+3/5*8/100}]
A={31250*(27/25)2 * (53/50)}
A=(31250*27/25*27/25*53/50)=Rs38637
COMPOUND INTEREST=
Rs(38637-31250)
= Rs 7387 Ans.
Interest Compound half Yearly

The interest is compound half yearly

rate=(R/2)% per half-year
Time=(2n)half year
Amount = P* (1+r/2*100)2n
compound interest = (amount) –
(principle)
For example -
 1.Find the compound interest on Rs 160000
for 2 years at 10 % per annum when
compounded semi annualy ?
ans. P = 160000,R=5%per halfyearT=4half
amount=RS{160000*(1+5/100)’4
amount={160000*21/20*21/20*21/20*21
/20}=RS194481.
COMPOUNDINTEREST=RS(194481-160000)
=RS 34481. ans
Interest compound Quarterly

 Rate=(r/4)% per
quarter, Time=
(4n)quarte
 Amount=
P*(1+R/4*100)4N
Compound Interest =
(Amount)- (principle)
INTEREST COMPOUNDED
FOR EXAMPLE -
QUATERLY IS SHOWN IN
FIGURE .
1.Find the compound interest on Rs 125000 for 9
months at 8%per annum , compounded quarterly ?
Ans. P=Rs125000,r=2%quater,t=3 quater
Amount=Rs{125000*(1+2/100}’3}
=Rs(125000*51/50*51/50*51/50)
=Rs 132651
Compound interest=Rs(132651-125000)
=7651 Ans.
THINGS TO REMEMBER