Compound Interest In Mathematics
Compound interest is an interest that has been added to the base money at the end of each interest payment period which is then used as the basis for determining the interest rate in the next period.
For more details, please see the following illustration:
If X keeps the money in the bank then at the end of each period, the interest earned is not taken, then the interest will be together capital into new capital that will bloom in the next period. The interest earned is greater than the interest on the previous period. The process in the above illustration is called with compound interest.
Pajar saves money in the bank $1,000,000 and the bank gives 10% interest / year. If interest is never taken and considered no bank administration fee. Please Determine the amount of interest earned Pajar after the capital settles for 3 years!
Answer:
The end of the first year of interest earned (I) is:
I = interest x capital
I = 10% x $1,000,000
I = $100,000
Beginning of the second year, capital becomes (C2):
C2 = C + I
C2 = $1,000,000 + $100,000
C2 = $1,100,000
End of second year, interest earned (I2) =
B2 = i x C2
B2 = 10% x $1,100,000
B2 = $110,000
Beginning of the third year, capital becomes (C3):
C3 = C2 + B2
C3 = $1,100,000 + $110,000
C3 = $1,210,000
At the end of the third year, the interest earned becomes (I3):
B3 = i x C3
B3 = 10% x C3
B3 = 10% x $1,210,000
B3 = $121,000
So the amount of interest earned after settling for three years is 100,000 + $110,000 + $121,000 = $331,000.
Similarly this article.
Sorry if there is a wrong word.
The end of word wassalamualaikum wr. wb
Referensi :
For more details, please see the following illustration:
If X keeps the money in the bank then at the end of each period, the interest earned is not taken, then the interest will be together capital into new capital that will bloom in the next period. The interest earned is greater than the interest on the previous period. The process in the above illustration is called with compound interest.
Example of compound interest
Answer:
The end of the first year of interest earned (I) is:
I = interest x capital
I = 10% x $1,000,000
I = $100,000
Beginning of the second year, capital becomes (C2):
C2 = C + I
C2 = $1,000,000 + $100,000
C2 = $1,100,000
End of second year, interest earned (I2) =
B2 = i x C2
B2 = 10% x $1,100,000
B2 = $110,000
Beginning of the third year, capital becomes (C3):
C3 = C2 + B2
C3 = $1,100,000 + $110,000
C3 = $1,210,000
At the end of the third year, the interest earned becomes (I3):
B3 = i x C3
B3 = 10% x C3
B3 = 10% x $1,210,000
B3 = $121,000
So the amount of interest earned after settling for three years is 100,000 + $110,000 + $121,000 = $331,000.
Similarly this article.
Sorry if there is a wrong word.
The end of word wassalamualaikum wr. wb
Referensi :
- To'Ali's book math group accounting and sales
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