Finding the Time Period for Compound Interest
in what time the compound interest on Rs800 at 20% per annum will amount to Rs1152 if compounded annually?
The compound interest formula is given below:
- A is the total amount of money (including interest) after n years
- P is the principal (the amount money borrowed or invested)
- r is the interest rate (per year or per annum)
- n is the loan or investment duration in years
Thus, let us substitute the values we have into the formula:
1152 = 800(1+0.2)^nSTEP 3
We can then proceed to solve the equation:
1152/800 = (1.2)^n
1.44 = (1.2)^n
1.44 = (1.2)^2
Thus, it takes two years
for the compound interest to amount to Rs1152.
You can also refer to our tutorial on how to calculate compound interest