8
Compound Interest and Depreciation
LEARNING OBJECTIVES
After studying this chapter, you will be able to understand:
Meaning and uses of compound interest
Meaning of interest compounded continuously
Meaning of nominal rate and effective rate of interest and their relation
Meaning and usage of depreciation
INTRODUCTION
In Chapter 7, we have studied that if interest is calculated for the whole period under consideration then it is called simple interest. However, if interest for the whole period is calculated more than once then it is called compound interest, i.e. the interest on interest is called compound interest. When interest at the and of a specified period is calculated and added to the principal and then the interest for the next ...
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