{"id":104904,"date":"2021-01-30T14:13:52","date_gmt":"2021-01-30T08:43:52","guid":{"rendered":"https:\/\/www.vskills.in\/certification\/tutorial\/?page_id=104904"},"modified":"2024-04-12T14:28:17","modified_gmt":"2024-04-12T08:58:17","slug":"compound-interest","status":"publish","type":"page","link":"https:\/\/www.vskills.in\/certification\/tutorial\/compound-interest\/","title":{"rendered":"Compound Interest"},"content":{"rendered":"\n<p><strong>Future Value<\/strong><\/p>\n\n\n\n<p>The term Compound Interest merely implies that interest paid (earned) on a loan (an investment) is periodically added to the principal. Consequently, interest is earned on the interest as well as the Principal or Original Amount. This interest-on-interest is compounding.<\/p>\n\n\n\n<p>FV1 = PV (1 + r)<\/p>\n\n\n\n<p>FV2 = FV1 (1 + r) = PV (1 + r) (1 + r) = PV (1 + r)<sup>2<\/sup><\/p>\n\n\n\n<p>FVn = PV (1 + r)<sup>n<\/sup><\/p>\n\n\n\n<p>For the compounding factor (1 + r)n for Re.1, compound interest tables or Future Value Interest Factor (FVIFn or terminal value interest factor) tables are designed.<\/p>\n\n\n\n<p>FV<sub>n <\/sub>= PV (FVIFr<sub>n<\/sub>)<\/p>\n\n\n\n<p>Present (or Discounted) Value<\/p>\n\n\n\n<p>Present Value of future cash flows allows us to place all cash flows on a current footing and enables to compare them in terms of present rupees<\/p>\n\n\n\n<p>FV<sub>n<\/sub><\/p>\n\n\n\n<p>PV = \u2014\u2014\u2014\u2014or FVn [ 1 \/ (1 + r)n]\n\n\n\n<p>(1 + r)<sup>n<\/sup><\/p>\n\n\n\n<p>The component [ 1 \/ (1 + r)<sup>n<\/sup>] is the Present Value Interest<\/p>\n\n\n\n<p>Factor (PVIFrn) and the reciprocal of the Future Value Interest Factor (FVIFrn)<\/p>\n\n\n\n<p>PV = FVn (PVIFrn)<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Future Value The term Compound Interest merely implies that interest paid (earned) on a loan (an investment) is periodically added to the principal. Consequently, interest is earned on the interest as well as the Principal or Original Amount. This interest-on-interest is compounding. FV1 = PV (1 + r) FV2 = FV1 (1 + r) =&#8230;<\/p>\n","protected":false},"author":1,"featured_media":0,"parent":0,"menu_order":0,"comment_status":"closed","ping_status":"closed","template":"","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-104904","page","type-page","status-publish","hentry"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v24.5 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Compound Interest - Tutorial<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.vskills.in\/certification\/tutorial\/compound-interest\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Compound Interest - Tutorial\" \/>\n<meta property=\"og:description\" content=\"Future Value The term Compound Interest merely implies that interest paid (earned) on a loan (an investment) is periodically added to the principal. 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