Introduction to interest rate formula:
In this article we discuss the interest rate formula. The annual percentage of the principal amount is represented as interest rate. The interest rate can be charged not only for year. It can be charged every month or every week or every six months. Sometimes the interest rate can be charged every day. The interest rate can be classified into two types,
Simple interest rate
Compound interest rate.
Some Important Formulas for Interest Rate:
Simple interest formula:
Simple interest rate SI=PNR
Where
P=Principal amount
N=Period of Time
R=Rate of the interest
We are knows the simple interest SI then we can find the P, N and R using the same simple interest formula.
First we can find P, We are using the formula is,
Principal amount `P=I/"NR"`
Next we can find N, We are using the formula is,
Period of time `N=I/"PR"`
Finally we can find R, We are using the formula is,
Rate of the interest `R=I/"PN"`
Compound interest rate formula:
Compound interest `CI=P (1+R/100) ^N`
Where
P=Principal amount
N=Period of time
R=Rate of the interest
Is this topic second fundamental theorem of calculus hard for you? Watch out for my coming posts.
Example Problems for Interest Rate Formula:
Problem 1:
John paid $4000 at 30% after 6 years in finance. To find the simple interest and compound interest.
Solution:
Here,
Principal amount P = $4000
Period N = 6years
Interest rate R = 30%
Simple interest SI = PNR
`SI =4000*6*30/100`
=7200
Simple interest = 7200
Compound interest `CI=P (1+R/100) ^N`
` CI = 4000( 1+30/100)^6`
`=4000( 130/100 )^6`
` =4000(13/10 )^6`
`=4000(4826809/ 1000000)`
`= 19307236/1000`
CI = 19307.236
Total amount of simple interest = 4000+7200
=11200
Total amount of compound interest=19307.236
Problem 2:
Vicky paid $1000 at 5% after 3years in finance. To find the simple interest and compound interest.
Solution:
Here,
Principal amount P = $1000
Period N =3years
Interest rate R= 5%
Simple interest SI = PNR
`SI =1000*3*5/100`
=150
Simple interest = 150
Compound interest `CI=P (1+R/100) ^N`
`CI = 1000( 1+5/100)^3`
`=1000( 105/100 )^3`
` =1000(21/20 )^3`
` =1000(9261/ 8000)`
CI = 1157.625
Total amount of simple interest = 1000+150
=1150
Total amount of compound interest=1157.625
In this article we discuss the interest rate formula. The annual percentage of the principal amount is represented as interest rate. The interest rate can be charged not only for year. It can be charged every month or every week or every six months. Sometimes the interest rate can be charged every day. The interest rate can be classified into two types,
Simple interest rate
Compound interest rate.
Some Important Formulas for Interest Rate:
Simple interest formula:
Simple interest rate SI=PNR
Where
P=Principal amount
N=Period of Time
R=Rate of the interest
We are knows the simple interest SI then we can find the P, N and R using the same simple interest formula.
First we can find P, We are using the formula is,
Principal amount `P=I/"NR"`
Next we can find N, We are using the formula is,
Period of time `N=I/"PR"`
Finally we can find R, We are using the formula is,
Rate of the interest `R=I/"PN"`
Compound interest rate formula:
Compound interest `CI=P (1+R/100) ^N`
Where
P=Principal amount
N=Period of time
R=Rate of the interest
Is this topic second fundamental theorem of calculus hard for you? Watch out for my coming posts.
Example Problems for Interest Rate Formula:
Problem 1:
John paid $4000 at 30% after 6 years in finance. To find the simple interest and compound interest.
Solution:
Here,
Principal amount P = $4000
Period N = 6years
Interest rate R = 30%
Simple interest SI = PNR
`SI =4000*6*30/100`
=7200
Simple interest = 7200
Compound interest `CI=P (1+R/100) ^N`
` CI = 4000( 1+30/100)^6`
`=4000( 130/100 )^6`
` =4000(13/10 )^6`
`=4000(4826809/ 1000000)`
`= 19307236/1000`
CI = 19307.236
Total amount of simple interest = 4000+7200
=11200
Total amount of compound interest=19307.236
Problem 2:
Vicky paid $1000 at 5% after 3years in finance. To find the simple interest and compound interest.
Solution:
Here,
Principal amount P = $1000
Period N =3years
Interest rate R= 5%
Simple interest SI = PNR
`SI =1000*3*5/100`
=150
Simple interest = 150
Compound interest `CI=P (1+R/100) ^N`
`CI = 1000( 1+5/100)^3`
`=1000( 105/100 )^3`
` =1000(21/20 )^3`
` =1000(9261/ 8000)`
CI = 1157.625
Total amount of simple interest = 1000+150
=1150
Total amount of compound interest=1157.625
No comments:
Post a Comment