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Compound Interest: Introduction
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This lessons deals with the way to solve question on CI nit by using formula.This chapter is the building base for the next coming lessons.Please watch it till the end in order to understand CI and ti handle question easily.

Manish Pandey
I am an engineer, educator at unacademy, aspire to be a government officer. Love to play badminton , watch football ,cook and eat.

U
Unacademy user
MP
Madam, Could you please post the flash cards as lots.
DrJewa Tripathy
2 years ago
I couldn't understand ur request. Plz elaborate.
DrJewa Tripathy
2 years ago
You can go through these faster in slidemode... If you want to use them as flashcards
it's very tough to understand what you are saying
BG
I didn't understand
Manish Pandey
9 months ago
dm me what u didn't understand
sir can i download this vedio?if yes how to download.
Manish Pandey
2 years ago
as such u can't download the video!! but if u have internet download manager extension in your browser there will be pop up through which you can download it!!
Naidu Nani
2 years ago
Thank you sir
  1. ABOUT ME Manish Pandey . Electrical Engineer Work as Category Expert at Unacademy . Follow me on unacademy https://unacademy.com/user/buntymanish07 If you like the lesson review and rate it and drop any query regarding the related course I'll answer that definitely.


  2. COMPOUND INTEREST Compound interest is different from simple interest in the way that in Cl interest is charged on the interest also. Interest on interest is the value that makes compound interest greater tha simple interest. . We just calculate the simple interest for the 1s year and add it to the principal to get the amount which is treated as the principal for 2nd year and so on till the time for the loan is taken is achieved This is long process and we will not use this for the calculation in the questions.


  3. FORMULA OF C 1 AmountP 1 100 If rate are r1% ,r2% ,r3 for 1st ,2nd and 3rd, repectively then Amount = P | 1 + 100 100 100


  4. Conversion of time period rate of interest Given rate 1% annual 1% annual 1% annual Given time Required rate r/2% half yearly r/4% quarterly r/12% monthly Required time t yr 12t


  5. BASIC PERCENTAGE FRACTION CONVERSION PERCENTAGE FRACTION CHART 50% = 12-96 20 33 % = 11 % 25 = 25% 10% = 40% = 12-96 10 20% = 60% -36 + 1 %-370 % = 16-1 12 3 -80% 14.7 % = 6-90 = 57-90 15


  6. CONVERSION OF RATE IN COMPOUNDINTEREST Rate Compound interest Rate Compound interest .No. (In percent) in percent) after two yearsS.No. (in percent) (in percent) after 2% 3% 4.04% 6.99% 8.16% 10.25% 12.36% 14.49% 16.64% 18.81% 21% 23.21% 25.44% 27.69% 2% 3% 4% 5% 5% 7% three years 6.1208% 9 2727% 12.4864% 15.7625% 19.1016% 22.5043% 3. 4. 5. 2 5% 6% 7% 4 8, 9. 10, 11, 12. 9% 10% 11% 1290 13% 6


  7. The Methods to calculate Cl The first method we will make tree of the rates: . Convert rate into fraction eg: 10%- 10 . Now the denominator is the principal and we raise the power of the denominator to the no. of years . Another method is successive increase of percentage . SO it makes a tree of the interest calculated


  8. TREE OF THE RATES Eg. The rate of interest is 10% and for 3 years. 10% = 1/10, Now the Principal (10)^3 = 1000 lets make the tree oD


  9. DEDUCTION OF TREE lb First line of the tree represents the SI for 3 yr.= 3a Now the difference b/w Cl and SI for 2 years = b Difference b/w Cl and Si for 3 years = 3b-c


  10. SUCCESIVE INCREASE IN THE PERCENTAGE Eg. We will take rate as 10% only. For 3 yrs Then 10% = When 10 is the principal l is the interest . So amount = 11 And it is compound interest so 10 principal Amount 10 X1O 10 P1000 1331 =A Thus we compare 1000 as the principal and 1331 as amount Thus CI = 1331-1000 331 UNITS