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Compound Interest Examples | Step by Step Calculation with Top Examples [Video]

Compound Interest Examples | Step by Step Calculation with Top Examples

In this video on Compound Interest Examples, here we discuss top examples of compound interest along with its calculations and formula.

๐‚๐จ๐ฆ๐ฉ๐จ๐ฎ๐ง๐ ๐ˆ๐ง๐ญ๐ž๐ซ๐ž๐ฌ๐ญ ๐„๐ฑ๐š๐ฆ๐ฉ๐ฅ๐ž๐ฌ
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Below are some examples of compound interest to understand the topic in better way.

๐„๐ฑ๐š๐ฆ๐ฉ๐ฅ๐ž #๐Ÿ – ๐‚๐จ๐ฆ๐ฉ๐จ๐ฎ๐ง๐๐ž๐ ๐€๐ง๐ง๐ฎ๐š๐ฅ๐ฅ๐ฒ

Mr. A makes an initial $6,000 investment over a 4 year period. Find the investment value after 4 years if the investment earns a monthly compounded return of 12%.

By using the compound interest formula we will calculate the value of the investment after the period of 3 years –

A = P (1 + r / m) ^ mt

P=$6000, r=12%, m=1, t=4 years

Therefore by using above formula we get,

A = $ 6,000 (1 + 0.12 / 1) 1*4
A = $ 6,000 (1 + 0.12) 4
A = $ 6,000 (1.12) 4
A = $ 6,000 * 1.574
A = $ 9,441

๐„๐ฑ๐š๐ฆ๐ฉ๐ฅ๐ž #๐Ÿ – ๐‚๐จ๐ฆ๐ฉ๐จ๐ฎ๐ง๐๐ž๐ ๐Œ๐จ๐ง๐ญ๐ก๐ฅ๐ฒ

Mr.Y makes an initial 6 year investment of $12,000. Find the investment value after 6 years if the investment earns a monthly compounded return of 4%.

By using the compound interest formula we will calculate the value of an investment after the period of 6 years –

A = P (1 + r / m) ^ mt

P=$12000, r=4%, m=12, t=6 years

Therefore by using above formula we get,

A = $ 12,000 (1 + 0.04 / 12) ^ 12*6
A = $ 12,000 (1 + 0.04 /12) ^72
A = $ 12,000 (1.0033) ^72
A = $ 12,000 * 1.2707
A = $ 15, 248

To know more about the ๐‚๐จ๐ฆ๐ฉ๐จ๐ฎ๐ง๐ ๐ˆ๐ง๐ญ๐ž๐ซ๐ž๐ฌ๐ญ ๐„๐ฑ๐š๐ฆ๐ฉ๐ฅ๐ž๐ฌ, you can go to this ๐ฅ๐ข๐ง๐ค ๐ก๐ž๐ซ๐ž:- https://www.wallstreetmojo.com/compound-interest-examples/

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Internal Rate of Return (IRR) | Formula | Calculation with Example [Video]

In this video on internal rate of return (irr), here we learn formula, example of irr along with significance and its drawbacks.๐–๐ก๐š๐ญ ๐ข๐ฌ ๐ˆ๐ง๐ญ๐ž๐ซ๐ง๐š๐ฅ ๐‘๐š๐ญ๐ž ๐จ๐Ÿ ๐‘๐ž๐ญ๐ฎ๐ซ๐ง (๐ˆ๐‘๐‘)?-------------------------------------------------------------------Internal return rate is the rate at which the net present value of the project is zero, the rate at which future cash flows are adjusted to calculate the present value.๐ˆ๐ง๐ญ๐ž๐ซ๐ง๐š๐ฅ ๐‘๐š๐ญ๐ž ๐จ๐Ÿ ๐‘๐ž๐ญ๐ฎ๐ซ๐ง (๐ˆ๐‘๐‘) ๐…๐จ๐ซ๐ฆ๐ฎ๐ฅ๐š-------------------------------------------------------------------NPV= 0= CF0 + CF1/(1+IRR)^1 + CF2/(1+IRR)^2 + ..... CFn/(1+IRR)^n๐’๐ญ๐ž๐ฉ๐ฌ ๐ญ๐จ ๐‚๐š๐ฅ๐œ๐ฎ๐ฅ๐š๐ญ๐ž ๐ˆ๐‘๐‘ ๐ข๐ง ๐„๐ฑ๐œ๐ž๐ฅ------------------------------------------------------#1 - Calculate Cash inflows and outflows in a standard format.#2 - Use the IRR formula in Excel#3 - Compare IRR to Discount Rate๐ˆ๐ง๐ญ๐ž๐ซ๐ง๐š๐ฅ ๐‘๐š๐ญ๐ž ๐จ๐Ÿ ๐‘๐ž๐ญ๐ฎ๐ซ๐ง (๐ˆ๐‘๐‘) ๐’๐ข๐ ๐ง๐ข๐Ÿ๐ข๐œ๐š๐ง๐œ๐ž-------------------------------------------------------------------------The IRR of any project shall be estimated taking into account the following three assumptions:1- The investments made are kept until the maturity dates.2 - The intermediate cash flows will reinvest itself in IRR.3 - By nature all cash flows are periodic, or the time gaps between various cash flows are equal.To know more about ๐ˆ๐ง๐ญ๐ž๐ซ๐ง๐š๐ฅ ๐‘๐š๐ญ๐ž ๐จ๐Ÿ ๐‘๐ž๐ญ๐ฎ๐ซ๐ง (๐ˆ๐‘๐‘), you can go to this ๐ฅ๐ข๐ง๐ค ๐ก๐ž๐ซ๐ž:- https://www.wallstreetmojo.com/internal-rate-of-return-irr/Subscribe to our channel to get new updated videos. Click the button above to subscribe or click on the link below to subscribe - https://www.youtube.com/channel/UChlNXSK2tC9SJ2Fhhb2kOUw?sub_confirmation=1