Compound Interest (CI) Formula

The CI formula helps to find the interest earned on interest. In compound interest, interest may be compounded annually, half yearly, quarterly, annually with fractional years and annually with different rates at each year. You can find the formula for all type of compounding interest here.


Total Amount = Principal + CI (Compound Interest)

a. Formula for Interest Compounded Annually
Total Amount = P(1+(R/100))n

b. Formula for Interest Compounded Half Yearly
Total Amount = P(1+(R/200))2n

c. Formulae for Interest Compounded Quarterly
Total Amount = P(1 + (R/400))4n

d. Formulae for Interest Compounded Annually with fractional years (e.g 2.5 years)
Total Amount = P(1 + (R/100))ax(1+(bR/100))
here if year is 2.5 then a =2 and b=0.5

e. With different interest rates for different years Say x% for year 1, y% for year2, z% for year3
Total Amount = P(1+ (x/100)) x (1+(y/100)) x (1+(z/100))


CI = Compound Interest
P = Principal or Sum of amount
R = % Rate per annum
n = Time Span in years

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CI is beneficial for any type of savings but it is suggestable for any type of borrowing.

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