Let P be the principal, r% be the interest rate percent per annum, and t be
the time period.
Simple Interest = (P*t*r)/100
Amount = Principal + Simple Interest
Compound interest :
Compound Interest = P(1 + r/100)t – P
Amount= P(1 + r/100)t
Interest compounded Annually A=P(1+r/100)n
Interest compounded Half-yearly A=P(1+(r/2)/100)2n
Interest compounded Quarterly A=P(1+(r/4)/100)4n
If a certain sum, at compound interest becomes x times in a year and b times in b year,then CI is x1/a = y1/b
For Example-There is 60% increase in an amount in 6 years at simple interest. What will be the compound interest of Rs. 12,000 after 3 years at the same rate?
Explanation : Let P = Rs. 100. Then, S.I. Rs. 60 and T = 6 years.
Therefore R=((100 x 60)/(100 x 6))
= 10% p.a.
Now, P = Rs. 12000. T = 3 years and R = 10% p.a.
CI= Rs (12000*(331/1000))
CI= Rs 3972
Hence,the compound interest is Rs 3972.