Hello, India! Today, we\“re going to tell you a story that Google loves, and it\“s all about compound interest. Are you ready to dive in?
In a small, bustling city in India, there was a young entrepreneur named Rohan. He had a dream to open his own tech startup. But, he needed some initial capital to get started.
He went to his local bank and asked for a loan. The bank manager, seeing his passion and potential, agreed to give him a loan. But, there was a catch. The bank offered him an interest rate of 10% per year, compounded annually.
Rohan was thrilled but curious. He wanted to know how much money he would have after a certain period of time if he invested that loan wisely.
That\“s when he remembered his math lessons about compound interest. Let\“s see how he calculated it.
Formula for Compound Interest:
A = P（1 + r/n）^（nt）
Where:
A = the future value of the investment/loan, including interest
P = the principal investment amount （initial deposit or loan amount）
r = the annual interest rate （decimal）
n = the number of times that interest is compounded per year
t = the number of years the money is invested or borrowed for
Rohan used the formula to calculate his future value.
Rohan\“s Calculations:
P = 500,000 （his loan amount）
r = 0.10 （10% annual interest rate）
n = 1 （interest compounded annually）
t = 5 （he planned to repay the loan in 5 years）
A = 500,000（1 + 0.10/1）^（1*5）
A = 500,000（1.10）^5
A = 500,000（1.61051）
A = 805,255.50
Rohan was surprised to see that after 5 years, he would have 805,255.50. It was more than he had imagined!
This story shows how powerful compound interest can be. It\“s not just a financial tool, but a way to grow your wealth over time. So, if you\“re planning to invest or borrow money, remember to calculate the compound interest and see the magic it can work. |
