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Basic concept and Formulas of Compound Interest Video Lecture | Quantitative Aptitude for SSC CGL

333 videos|195 docs|244 tests

FAQs on Basic concept and Formulas of Compound Interest Video Lecture - Quantitative Aptitude for SSC CGL

1. What is compound interest?
Compound interest is the interest calculated not only on the initial principal amount but also on the accumulated interest from previous periods. It means that interest is earned on both the principal amount and the interest earned previously.
2. What is the formula for compound interest?
The formula for compound interest is given by: A = P(1 + r/n)^(nt) Where: A = the final amount (including principal and interest) P = the principal amount r = the annual interest rate (expressed as a decimal) n = the number of times that interest is compounded per year t = the time in years
3. How is compound interest different from simple interest?
Compound interest is different from simple interest because it takes into account the interest earned from previous periods, while simple interest only considers the initial principal amount. Compound interest accumulates over time and results in a higher final amount compared to simple interest.
4. How often should compound interest be compounded?
The frequency of compounding depends on the terms of the loan or investment. It can be compounded annually, semi-annually, quarterly, monthly, or even daily. The more frequent the compounding, the higher the final amount will be.
5. How can compound interest be used to maximize savings or investments?
To maximize savings or investments using compound interest, it is essential to consider the interest rate, the compounding frequency, and the time period. By choosing a high-interest rate, frequent compounding, and a longer time period, the final amount can significantly increase. It is advisable to start saving or investing early and regularly to take advantage of compound interest over a longer duration.
333 videos|195 docs|244 tests

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