Compound Interest

We can solve Simple Interest problem more easily, but in case of Compound Interest we just get confuse, how to solve this compound Interest.

Here is some simple Technique by that we can easily solve the Compound Interest Easily.

Lets Start it.

Compound Interest = P(1+R/100)^n -P, So this is the formula for Compound Interest.

Lets See some Examples.

Simple Concept to understand to solve the problem,

Suppose we invest 100 rs at rate 10% .

So in 1st year we will get 10% of 100 = 110

For 2nd year we will get 10% of 110 = 11 = so total = 121

For 3rd year we will get 10% of 121 = 12.1 = total = 133.1

What happening here is, the Interest is Calculate is on the Amount, not on Initial Amount and the Amount is changing Every year.

**See this Total no. 11, 121, 1331 it is an power of 11 and Cube of 11**

**Example 1**: If Principal Amount = 10000, Rate = 10%, Time = 3 Years, Find the Compound Interest & Amount ?

**Solution**: So for this problem Principal Amount = 10000

So in 1st year 10% of 10000 = 1000, so total Amount = 10000+1000 = 11000

For 2nd year 10% of 11000 = 1100, so the total Amount = 11000+1100 = 12100

For 3rd year 10% of 12100 = 1210, so the total Amount = 12100+1210 = 13310.

In simple we can see that, total was 10000, we can write 10% = 1.1

So by 10%, in 1st year we will get 1.1, 2nd year also 1.1 & 3rd year also 1.1, we can multiply it

So, 11 * 11 * 11 = = 13310.

So Amount = 13310

**Example 2**: If Principal Amount = 10000, for 1st year Rate = 10%, for 2nd = 20% & for 3rd year = 30%, then Compound Interest (C.I.) and Amount ?

**Solution**: we have understand Above Problem.

We can write 10% = 1.1, 20% = 1.2, 30% = 1.2

So for 1st year 10% = 1.1, 2nd year 20% = 1.2, 3rd year 30% = 1.3 = 1.1×1.2×1.3 = 1.716

So we can write 10000 × 1.1 × 1.2 × 1.3 = 10000 × 1.716 = 17160

We simply solve this, we don’t need any formula.

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