NOW ENROLLING FOR TEST SERIES I.C.S.E. 2023 -24 STD VIII IX AND X

STD IX – COMPOUND INTEREST – ARCHIMEDES

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Compound interest is the addition of interest to the principal sum of a loan or deposit, or in other words, interest on interest. It is the result of reinvesting interest, rather than paying it out, so that interest in the next period is then earned on the principal sum plus previously accumulated interest.

COMPOUND INTEREST (WITHOUT FORMULA)

Simple Interest and Compound Interest

When money is borrowed, interest is charged on the amount borrowed for a specific period of time. This is called simple interest. The borrower has to pay back the lender the sum of the principal amount and the total interest for the specified period of time.

On the other hand, compound interest is calculated on the principal plus the interest for the previous period. The principal amount increases with every time period, as the interest payable is added to the principal. This means interest is not only earned on the principal, but also on the interest of the previous time periods.

So we can say that the compound interest calculated is more than the simple interest on the same amount of money deposited.

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What Will You Learn?

  • Computation of Interest
  • Deciphering the interest on Principal Amount
  • Learn how wealth increases by compounding
  • Know why Compound interest is "Interest paid on Interest"

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ASSIGNMENT AND DUE DATES

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