Compounding of interest charges

Compounding of interest charges - … K(l r)n ’V’ is...

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Compounding of interest charges : As the number of years of the borrowing period increase the compounded interest goes on increasing. In general, for n number of years, the mathematical formula used for compounding purposes is as follows: V = K(l + r)n [V = K(l + r) 1, K(l + r)2
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Unformatted text preview: …, K(l + r)n] ’V’ is the final value of the loan plus interest, ’K’ is the capital or principal amount borrowed, ’r’ is the rate of interest and ’n’ is the number of years of borrowing. In our example, V = 1210, K = 1000, r = 10% or 0.10 and n = 2...
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This note was uploaded on 11/26/2011 for the course EC ec 201 taught by Professor - during the Fall '10 term at Montgomery.

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