0The formula for annual compound interest, including principal sum, is:
A = P (1 + r/n) (nt)
Where:
A = The future value of the investment/loan, including interest.
P = The principal investment amount (the initial deposit or loan amount).
r = The annual interest rate (decimal).
n = The number of times that interest is compounded per year.
t = The number of years the money is invested or borrowed for.
If an amount of Rs 5,000 is given at an annual interest rate of 5%, compounded monthly, the value of the investment after 10 years can be calculated as follows:
P = 5000. r = 5/100 = 0.05 (decimal). n = 12. t = 10.
If we plug those figures into the formula, we get:
A = 5000 (1 + 0.05 / 12) ^ (12(10)) = 8235.05.
So, the investment balance after 10 years is Rs 8,235.05
