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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.

𝐂𝐨𝐦𝐩𝐨𝐮𝐧𝐝 𝐈𝐧𝐭𝐞𝐫𝐞𝐬𝐭 𝐄𝐱𝐚𝐦𝐩𝐥𝐞𝐬
——————————————————–
Below are some examples of compound interest to understand the topic in better way.

𝐄𝐱𝐚𝐦𝐩𝐥𝐞 #𝟏 – 𝐂𝐨𝐦𝐩𝐨𝐮𝐧𝐝𝐞𝐝 𝐀𝐧𝐧𝐮𝐚𝐥𝐥𝐲

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

𝐄𝐱𝐚𝐦𝐩𝐥𝐞 #𝟐 – 𝐂𝐨𝐦𝐩𝐨𝐮𝐧𝐝𝐞𝐝 𝐌𝐨𝐧𝐭𝐡𝐥𝐲

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 𝐂𝐨𝐦𝐩𝐨𝐮𝐧𝐝 𝐈𝐧𝐭𝐞𝐫𝐞𝐬𝐭 𝐄𝐱𝐚𝐦𝐩𝐥𝐞𝐬, you can go to this 𝐥𝐢𝐧𝐤 𝐡𝐞𝐫𝐞:- https://www.wallstreetmojo.com/compound-interest-examples/

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