Compound Interest Explained
Compound Interest Explained

# Find CI when interest is compounded annually but Rates are different

We at ask-math believe that educational material should be free for everyone. Please use the content of this website for in-depth understanding of the concepts. Additionally, we have created and posted videos on our youtube.

We also offer One to One / Group Tutoring sessions / Homework help for Mathematics from Grade 4th to 12th for algebra, geometry, trigonometry, pre-calculus, and calculus for US, UK, Europe, South east Asia and UAE students.

Affiliations with Schools & Educational institutions are also welcome.

Please reach out to us on [email protected] / Whatsapp +919998367796 / Skype id: anitagovilkar.abhijit

We will be happy to post videos as per your requirements also. Do write to us.

To find CI when interest is compounded annually but rates are different, we use the following formula :

A = P( 1 + R1)( 1 + R2)... ( 1 + Rn)

Where P = Principal
R1,R2,R3...interest rates percent for different years.

Examples :

1) Roger bought a refrigerator for $4000 on credit. The rate of interest for the first year is 5% and of the second year is 15%. How much will it cost him if he pays the amount after two years. Solution: Here, P =$ 4000, R1 = 5% p.a and R2 = 15% p.a.

∴ Amount after 2 years = P( 1 + R1)( 1 + R2)

= 4,000 x ( 1 + 0.05) ( 1 + 0.15)

= 4000 x ( 1.05) ( 1.15 )

= 4000 x 1.2075

= $4830 ∴ The refrigerator will cost$ 4830 to Roger.
_________________________________________________________________
2) Find the amount of $12,500 for 2 years compounded annually, the rate if interest being 15 % for the 1st year and 16 % for the second year. Here, P =$12,500 , R1 = 15 % and R2 = 16 %

∴ Amount after 2 years = P( 1 + R1)( 1 + R2)

= 12,500x ( 1 + 0.15) ( 1 + 0.16)

= 12,500 x ( 1.15) ( 1.16 )

= 12,500 x 1.334

= $16,675 ∴ Amount =$16,675

Compound Interest(CI)

Find Compound Interest when interest is compounded Half yearly
Find Compound Interest when interest is compounded Quarterly
Find CI when interest is compounded annually but Rates are different
Finding Principal
Finding Time Period of Investment
Finding Rate of Interest