Kavi
- 1. POWER POINT PRESENTATION KAVITHA C KURUP B.Ed MATHEMATICS REG NO : 13304005
- 2. Compound interest : Derivation for amount from the equation of simple interest
- 3. In some cases, the interest is added to the principal to form a new principal ,which maybe reinvested for the next time period. The difference between the original principal and the amount at the end of the last time period is known as compound interest.
- 4. Let’s see how we can compute the total amount. Let P be the principal r be the rate of interest n be the number of years
- 5. We have I=( Pnr)/ 100 Interest for the first year I1 =Px r /100 A1 = P + (Pr/100) = P(1+(r/100))
- 6. Principal for the second year = P+( P x r/100) =P(1+ (r/100)) Interest = P(1+ (r/100))x(r/100) A2 = P(1 + (r/100)) + P ( 1+ (r/100)) x (r/100 ) = P (1 + r/100) 2
- 7. Principal for the third year = P (1+ (r/100)) 2 Interest = P (1 + (r/100)) 2 x (r/100) A3 = P (1 + (r/100 )) 2 + P (1 +(r/100)) 2 x (r/100) = P (1 +(r/100)) 2 x ( 1+(r/100 )) = P(1 + ( r/100 )) 3
- 8. Continuing like this , the amount A , including after n years is given by A= P (1+(r/100)) n
- 9. Amount = P(1 +(r /100 )) n Where P= Principal amount r = rate of interest n = number of years