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Compound Interest (Definition, Formulas and Solved Examples)

Source: byjus.com

1. Compound interest is the interest imposed on a loan or deposit amount, and it is different from simple interest.

2. The formula for compound interest is CI = A - P, where A represents the amount, P represents the principal, r represents the rate of interest, n represents the number of times interest is compounded per year, and t represents the time in years.

3. Compound interest is used in various applications such as population growth, bacterial growth, and changes in the value of an item.

The article provides a comprehensive overview of compound interest, including its definition, formulas, and examples. It explains that compound interest is the interest calculated on both the principal amount and the interest accumulated over previous periods. The article also highlights the difference between compound interest and simple interest, where interest is not added to the principal.

One potential bias in the article is its promotion of a specific website's compound interest calculator. While it may be a useful tool, its inclusion in the article could be seen as promotional content.

The article does not provide any evidence or sources to support its claims about compound interest being used in various sectors such as banking and finance. It would have been helpful to include examples or references to back up these statements.

Additionally, the article does not explore any counterarguments or potential drawbacks of compound interest. It only presents compound interest as a beneficial concept without considering any potential risks or disadvantages.

The article also lacks depth in explaining how to calculate compound interest. While it mentions the formula, it does not provide step-by-step instructions or walk through any specific calculations. This could make it difficult for readers who are unfamiliar with the concept to understand how to apply it in practice.

Overall, while the article provides a basic understanding of compound interest, it could benefit from providing more evidence, exploring counterarguments, and offering more detailed explanations and examples.