Topics and method
Identify principal, rate, compounding interval, time and cash-flow timing before applying interest or annuity formulae.
Worked application
₹10,000 at 10% compounded annually for 2 years becomes ₹12,100; compound interest is ₹2,100.
Practice
- Write the formula and assumptions before substituting.
- Interpret the result using the units and context in the question.