Compound Interest (half yearly by Shortcut Method)

Calculate Compound Interest (half yearly)

Calculate Compound Interest (Quarterly)

Difference Compound Interest Yearly & Half Yearly

Difference Compound Interest Yearly & Quarterly

Difference Compound Interest Half Yearly & Quarterly

Before you study How to calculate Compound Interest where rate of interest is compounded semi annually, you are advice to read: What is Compound Interest ? In general we can say that: In Compound Interest where rate of interest is compounded half yearly or semi annually, interest is calculated after every 6 months Or we can also that: In Compound Interest (compounded half yearly) interest is added after every six months to form a new principal. Formula to Calculate Amount in case of compound interest compounded half yearly or semi-annually: Amount = P ( 1 + R / 200 ) 2T Here: P is Principal R is Rate of Interest T is Time in years Formula to Calculate compound interest when rate compounded half yearly or semi-annually: CI = P [ ( 1 + R / 200 ) 2T - 1] Example : Find Compound interest on $10000 for 2 years at rate 10% interest per annum compounded semi annually ? Solution: As per the given question: Principal or P = $10000 Rate of Interest or R = 10% Time or T = 2 years CI = P [ ( 1 + R/200 ) 2T - 1] Put values of P, R and T from above and we get: CI = 10000 [ (1 + 10/200) 2 X 2 - 1 ] Solution as shown in below steps: CI = 10000 [ ( 1 + 10 / 200 ) 4 - 1 ] CI = 10000 [ { (200 + 10) / 200) } 4 - 1 ] CI = 10000 [ { 210 / 200) } 4 - 1 ] CI = 10000 [ { 21 / 20) } 4 - 1 ] CI = 10000 [ { 194481 / 160000 } - 1 ] CI = 10000 [ (194481 - 160000) / 160000 ] CI = 10000 [ 34481 / 160000 ] CI = 10000 X 34481 / 160000 CI = 34481 / 16 CI = 2155.0625 Hence, compound interest; when rate is compounded semi annually; is equal to $2155.0625.