Tips & Tricks: Compound Interest

# Tips & Tricks: Compound Interest Video Lecture | Quantitative Aptitude for SSC CGL

## Quantitative Aptitude for SSC CGL

314 videos|170 docs|185 tests

## FAQs on Tips & Tricks: Compound Interest Video Lecture - Quantitative Aptitude for SSC CGL

 1. What is compound interest and how does it work?
Ans. Compound interest is the interest calculated on both the initial principal and the accumulated interest from previous periods. It is different from simple interest, as it allows the interest to grow over time. Compound interest is calculated based on the principal amount, interest rate, and the compounding period. The more frequently the interest is compounded, the more interest you will earn.
 2. How can I calculate compound interest?
Ans. To calculate compound interest, you can use the formula: A = P(1 + r/n)^(nt), where A is the future value of the investment, P is the principal amount, r is the annual interest rate, n is the number of times the interest is compounded per year, and t is the number of years. By plugging in these values, you can calculate the future value of your investment.
 3. What is the difference between compound interest and simple interest?
Ans. The main difference between compound interest and simple interest is that compound interest includes the accumulated interest from previous periods, while simple interest only calculates interest based on the initial principal. Compound interest allows your investment to grow faster over time, as it compounds the interest over each compounding period.
 4. How does the compounding period affect compound interest?
Ans. The compounding period refers to how often the interest is added to the principal amount. The more frequent the compounding period, the more interest you will earn. For example, if the interest is compounded annually, you will earn interest once a year. However, if the interest is compounded quarterly or monthly, you will earn interest more frequently, resulting in a higher overall return on your investment.
 5. Can compound interest work against you?
Ans. Yes, compound interest can work against you when you have debt instead of investments. If you have a loan or credit card debt, the compound interest will accumulate on the outstanding balance, which can lead to a significant increase in the total amount owed over time. It is important to be mindful of the interest rates and compounding periods when managing debt to avoid excessive interest charges.

## Quantitative Aptitude for SSC CGL

314 videos|170 docs|185 tests

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