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what is the formula for working out compound interest. The formula for compound interest is Compound Interest CI Principal 1Rate100n - Principal where P is equal to Principal R is equal to Rate of Interest T is equal to Time Period Image will be uploaded soon. And by rearranging that formula see Compound Interest Formula Derivation we can find any value when we know the other three.
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But when someone lends money from the banks the banks charge the interest from the person who has taken the loan in daily compounding interest. Below is an overview of how to calculate it. P is the principal the amount money borrowed or invested r is the interest rate per year or per annum n is the loan or investment duration in years.
The Excel compound interest formula in cell B4 of the spreadsheet on the right once again calculates the future value of 100 invested for 5 years with an annual interest rate of 4.
The compound interest formula is the way that compound interest is determined. The Rule of 72 is another way to make estimates about compound interest quickly. But when someone lends money from the banks the banks charge the interest from the person who has taken the loan in daily compounding interest. PV FV1r n.
