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Some more type of Problems based on Compound Interest Video Lecture | Quantitative Aptitude for SSC CGL

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FAQs on Some more type of Problems based on Compound Interest Video Lecture - Quantitative Aptitude for SSC CGL

1. What is compound interest and how is it calculated?
Compound interest is the interest earned on both the initial principal and the accumulated interest from previous periods. It is calculated using the formula A = P(1 + r/n)^(nt), where A is the final amount, P is the principal amount, r is the interest rate, n is the number of times interest is compounded per year, and t is the number of years.
2. How does compound interest differ from simple interest?
Compound interest takes into account the accumulated interest from previous periods, while simple interest only considers the initial principal. In compound interest, the interest earned in each period is added to the principal, resulting in a higher overall interest amount over time compared to simple interest.
3. Can you provide an example of compound interest calculation?
Certainly! Let's say you invest $5,000 at an annual interest rate of 6%, compounded annually for 3 years. Using the compound interest formula, the calculation would be: A = 5000(1 + 0.06/1)^(1*3) = $5,954.86. Therefore, after 3 years, your investment would grow to approximately $5,954.86.
4. How frequently can interest be compounded?
Interest can be compounded at various frequencies, such as annually, semi-annually, quarterly, monthly, or even daily, depending on the terms of the investment or loan. The more frequently interest is compounded, the higher the overall interest amount will be.
5. What are some practical applications of compound interest in everyday life?
Compound interest is widely used in various financial aspects of life, such as savings accounts, investments, mortgages, and loans. It helps individuals and businesses grow their wealth over time by earning interest not only on the initial principal but also on the accumulated interest. It is important to understand compound interest to make informed financial decisions and maximize returns.
335 videos|201 docs|244 tests

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