Compound Interest
Comparing Quantities · Class VIII
Compare simple vs compound interest as you change principal, rate and time.
- Simple Interest3,000
- CI Amount13,310
- CI Interest3,310
- CI Amount over years
Formulas in this lab
- Simple Interest
- CI Amount
- CI Interest
Frequently asked questions
▶What is compound interest and how is it calculated?
Compound interest is interest on interest. The formula is $A = P(1 + R/100)^T$ for yearly compounding. So Rs 10000 at 10% for 3 years grows to 10000 * 1.331 = Rs 13310, with interest Rs 3310.
▶How do I use the compound interest lab?
Slide principal P, rate R and time T. The lab shows both compound and simple interest side by side so you can compare. Try P = 10000, R = 10, T = 5 to see CI of Rs 6105 and SI of only Rs 5000.
▶How is compound interest used in Indian banks?
Fixed deposits and recurring deposits in Indian banks usually compound interest quarterly. A Rs 50000 FD at 7% for 3 years gives roughly 50000 * (1.07)^3 = Rs 61252. The lab uses yearly compounding for simplicity but the idea is the same.
▶SI vs CI: when is the gap noticeable?
For 1 year, SI and CI give the same amount. For 2 years the gap is one extra dose of interest on the first year's interest. For 10 years on Rs 100000 at 10%, SI gives Rs 100000 interest while CI gives about Rs 159374. The lab shows this widening gap clearly.