Here are the steps to calculate compound interest: 1. Identify the principal amount (P), interest rate (R) and time period (N) 2. Use the compound interest formula: A = P (1 + R/100)^N 3. Calculate the interest and amount for each time period (year/half-year etc depending on compounding frequency) 4. Add the interest to the principal amount to get the new principal for the next time period 5. Keep repeating steps 3 and 4 till you cover the total time period The formula to calculate compound interest is: A = P (1 + R/100)^N Where, A is the total

1. WELCOME

2.  What do you mean by simple interest?
Interest calculated only on the original investment
each year is simple interest.
 What is compound interest?
Interest for each year is added to the current
amount in calculating interest for the next year, without actual
withdrawal and reinvestment. Interest calculated thus is compound
interest.
 What is the formula to find the compound interest?
𝒑 𝟏 +
𝒓
𝟏𝟎𝟎
𝒏

3. Problem- compound interest

4. Thomas took out a loan of 15000Rs from a bank which charges 12%
interest, compounded annually. After 2 years, he paid back 10000Rs. To
settle the loan, how much should he pay at the end of 3 years?
 How much amount Thomas took out a loan?
15000
 What is the principal amount?
p= 15000
 What is the rate of interest from the bank?
r= 12%
 What is the simple interest for 1st year?
15000 × 12/100 = 1800

5.  What is the principal amount of second years?
15000+1800=16800
 What is the simple interest for the second years?
16800 × 12/100 = 2016
 What is the total amount after two years?
16800 + 2016 = 18816
 How much amount after he paid back two years?
10000
 What is the principal amount of third years?
18816 – 10000 = 8816
 What is the simple interest for third years?
8816 × 12/100 = 1057.92
 How much amount after he pay at the end of three years?
8816+1057.92 = 9873.92rs

6. Steps for calculating compound interest
Step1:- first identify the terms.
Step2:- calculating simple interest for the given years.
Step3:- calculating the amount for the given years.

7. You have deposited 6000 rupees in a bank, which gives 6% interest
compounded annually. How much would he get back after 2 years?
He get after two years = 𝟔𝟎𝟎𝟎 𝟏 +
𝟔
𝟏𝟎𝟎
𝟐
= 𝟔𝟎𝟎𝟎
𝟏𝟎𝟔
𝟏𝟎𝟎
𝟐
= 𝟔𝟎𝟎𝟎 𝟏. 𝟎𝟔 𝟐
= 6000 × 1.1236
= 6741.6rs

8.  Explain the steps in which we calculate the compound
interest?
 What is the formula to find compound interest?

9. 1. Gopal deposited 30000 rupees in a bank which gives 5% interest
compounded annually. After two years he withdraws 10000 rupees.
After one more year, how much would he have in his account?
2. The simple interest at 5% got for a certain amount after 2 years is
200 rupees. If interest is compounded annually, what would be the
interest for same amount at the same rate after 2 years?