Compound Interest

Important concepts of Compound Interest

1. The money is said to be compounded, if the interest at the end of a year or some other fixed period which has fallen due is not paid to lender but is added to the principal, so that the amount at the end of this period becomes the principal for the next period. This process is repeated until the amount for the last period has been obtained.
2. Some entities such as population, the height of a tree, weight and height of a child, increase in magnitude over a period of time. The function of increase is called growth. Growth per unit of time is called the rate of Growth.

More about Compound Interest

1. In case of compound interest, the principal increases
   1. after every year, if compounded annually
   2. after every six months, if compounded half yearly

• after every four months, if compounded quarterly

2. On the same sum and at the same rate of interest compounded yearly,
   1. the C.I of 2nd year is always more than the C.I of 1st
   2. I. of 3rd year is more than C.I of 2nd year.

3. On the same sum and at the same rate of interest compounded half-yearly,
   1. the C.I of 2nd half year is always more than the C.I of 1st half-year.
   2. I. of 3rd half-year is more than C.I of 2nd half-year.