VIII Compound Interest

Formula
𝑟
A = P (1+ )nt Cube numbers
100𝑛
1x1x1 = 1

2x2x2 = 8

3x3x3 = 27

4x4x4=64

5x5x5 = 125

6x6x6 = 216

Value of n when the interest is compounded. 7x7x7 = 343

8 x 8x 8 = 512
a) Annually / Yearly ……………….n = 1
9 x 9x 9 = 729
b) Half yearly / Semi Annually………. n = 2

c) Quarterly…………………n = 4

d) Monthly…………………..n = 12

e) Daily………………………..n = 365

f) Weekly…………………….n = 52

Examples:

a) Larry invested $27,000 in a savings account that pays an annual interest rate of
1.8%. The savings account is set to compound quarterly (4 times per year). How
much is in Larry’s account after 5 years?
b) Becky invested 19,800 in a CD that pays an annual interest rate of 5.3%. The CD

is set to compound daily (365 times per year). How much is in Becky’s account
after 9 years?

Answers:
a) $29,536.74 b) $31,901.32
 1.

2.

Without Calculator

3.

4.
With calculator (Time 20 mins)
1. What will be the compound interest on a sum of $25,000 after 3 years at the rate of
12% per annum?

2. Find the amount and the compound interest on $ 160000 for 2 years at 10% per
annum, compounded half-yearly.

3. A certain sum amounts to $ 72900 in 2 years at 8% per annum compound interest,

compounded annually. Find the sum.

4. Find the amount and the compound interest on $ 1, 00,000 compounded quarterly
for 9 months at the rate of 4% per annum.

5. If the simple interest on a sum of money at 5% per annum for 3 years is $ 1200, then
calculate the compound interest on the same sum for the same period at the same
rate.