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Business Mathematics by Chirag Trivedi, Kashyap Trivedi

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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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