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

𝐂𝐨𝐦𝐩𝐨𝐮𝐧𝐝 𝐈𝐧𝐭𝐞𝐫𝐞𝐬𝐭 𝐄𝐱𝐚𝐦𝐩𝐥𝐞𝐬

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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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