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asked 3 years ago
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Guest
answered 6 months ago
In banks the rate of interest is being calculated on compound basis and the formula that you can use to calculate compound interest is following: I = P (1+ r/100)ⁿ - P. In this formula the letter 'I' represents the amount of interest and letter P is used to represent the principal amount. The rate of interest is being represented by the letter 'r' and letter 'n' that is written out side the bracket shows the period of time for which a particular amount has been lent.
While actually calculating the interest, you will have to be subtle while dealing with the time section as some times it has been calculated on the daily basis also and you should convert the daily part into the annual one to know the exact amount that has been earned on your deposit or the amount the bank has earned on the amount it has lent.
While actually calculating the interest, you will have to be subtle while dealing with the time section as some times it has been calculated on the daily basis also and you should convert the daily part into the annual one to know the exact amount that has been earned on your deposit or the amount the bank has earned on the amount it has lent.
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