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How compound interest formula is helpful for a financial institution in order to calculate the amount due by customers?
Wiki User
∙ 14y ago
In fact compound interest is exciting if you're lending but dangerous if you're borrowing as the interest is added to the principal and itself attracts interest.
To calculate compound interest use the Rule of 42. Divide the rate of interest into the number 42 and the answer is the number of periods - usually years when dealing with annual interest - for the principal, i.e. the sum borrowed and therefore the amount to be paid back, to double in value.
Example: borrow $1000 at 6% p.a., pay nothing each year and you will owe $2000 at the end of 7 years.
Conversely, use the rule of 42 to find out the rate of depreciation. If your $10,000 car depreciates at 6% a year then it will be worth $5000 at the end of 7 years.
Wiki User
∙ 14y ago
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What is 'Annual Equivalent Rate'?
Interest payments can calculated annually, quarterly, monthly, daily or even continuously. To enable consumers to compare rates quoted over different periods, many authorities require financial institutions to calculate the total compound interest over a year. That is the AER.
Calculate the sum to which 6000 will amount in 5years at 12 percent per annum compound interest?
5,132.33^10
What does the word compound means?
Compound in interest rates is as thus, compounded monthly means,if you get 3 cents interest this month, next month it compounds to 6 cents and so on! The next month 12 cents, depending on your financial institution and the rise and fall of interest rates.
How do you calculate the compound interest rate?
A= Principle amount(1+ (rate/# of compounded periods))(#of compounding periods x # of years)
What is the corresponding componding?
Corresponding compounding is the interest rate on loan or the financial product restated from nominal interest rate as an interest rate with an annual compound interest.
What information is needed to calculate the percent composition of a compound?
The formula of the compound and the Atomic Mass of its elements.
How do you calculate the grams of an element in a specific amount of a compound?
Multiply the mass of the compound by the conversion factor based on the percent composition of the element in the compound
What is the enemy of compound interest and makes it very difficult to reach your financial goals?
inflation
Do you need to know atomic weight to calculate molarity?
Yes, you definitely need to know the molecular weight of a compound to calculate molarity.
What additional information is needed to calculate the molecular formula from the percent by mass of each element in a compound?
The number of atoms of one element in the compound
What do you need to calculate the percent-age composition of a substance?
The molecular formula of the compound can be calculated from the composition of element in a compound. The next steps are involved in the calculation of percentage of every element in a compound.
Calculate the formula mass of the compound calcium hydroxide ca oh 2?
240gm
How do I calculate compound average growth rate using excel?
use the rate function
How do you calculate aggregate saving?
You can calculate aggregate saving by using the power of compounding. The earlier you start saving, the faster you can aggregate or compound your existing savings in the bank.
What is 'Annual Equivalent Rate'?
Interest payments can calculated annually, quarterly, monthly, daily or even continuously. To enable consumers to compare rates quoted over different periods, many authorities require financial institutions to calculate the total compound interest over a year. That is the AER.
How to calculate 5 ppm for any solution?
5 mg of an element or compound in 1 L of solution
How do you calculate available chlorine?
(35.5/mr of compound ) * (number of electrons iit accept when it reacts) * 100
