Top Banner

Monthly Compound Interest Formula

Monthly Compound Interest Formula

Compound interest is an interest of interest to the principal sum of a loan or deposit. The concept of compound interest is the interest adding back to the principal sum so that interest is earned during the next compounding period.

The formula is given as:

Monthly Compound Interest = Principal

\(\begin{array}{l}(1+\frac{Rate}{12})^{12*Time}\end{array} \)
– Principal

Solved Example

Question: A sum of Rs. 5000 is borrowed and the rate is 8%. What is the monthly compound interest for 2 years?

Solution:

Monthly Compound Interest = Principal

\(\begin{array}{l}(1+\frac{Rate}{12})^{12*Time}\end{array} \)
– Principal

Monthly Compound Interest = 5000

\(\begin{array}{l}(1+\frac{8}{100*12})^{12*2}\end{array} \)
– 5000

Monthly Compound Interest = 5000 × 1.1738 – 5000

= 5869 – 5000 = 869

The monthly compound interest for 2 years is Rs. 869.

FORMULAS Related Links
Mathematics Formula Pdf For Competitive Exam Regular Polygon Formula
Percentile Formula Summation Formulas
Perfect Square Formula Unit Rate Formula
Chemestry Formula Molality Definition And Formula
Parallel Resistor Formula Current Density Units

Comments

Leave a Comment

Your Mobile number and Email id will not be published.

*

*