Compound Interest – Future Value – Concept, Formula with Numerical

Compound Interest, Future Value – Concept, Formula with Numerical

[Watch video for detailed explanation of concept, formula with examples]

In compound interest the interest earned will also earns interest. That is the interest is calculated on total of previously earned interest and the original principal amount.

Formula for calculating future value with compound interest is

FV = P [1 + i]n

Numerical Problem

Q. 1. An investor deposits $1000 in a bank account that pays 10% compound interest pa. Calculate the accumulated amount after 2 years.

[Watch video for solution of the Numerical Problem]

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