RD Sharma Solutions for Class 8 Maths Chapter 14: Compound Interest

The chapter includes the concepts of applications of compound interest formula, the concept of compound interest, the concept of discount, the concept of percent and percentage, concept of principal, interest, amount and simple interest, the concept of ratio, the concept of cost price, selling price, total cost price.

Compound Interest: Compound interest is adding interest to the principal balance of the loan or deposit. It is the concept that is also known as interest on interest. Instead of repaying it, it is the result of reinvesting interest. Therefore interest is paid on the principal sum plus previously accumulated interest in the next cycle. Compound interest is concerned with money; thus, Class 8 pupils must comprehend the principles fully. The amount of compounding periods makes a considerable impact when calculating compound interest. The basic concept is that the more compounding periods there are, the more compound interest there is. It differs from Simple Interest (SI), in which previously accrued interest is not added to the current period's principal amount, resulting in no compounding. In finance and economics, compound interest is the norm. The formula for compound interest is

A=P (1 + r/100)ⁿ.

In this equation,

A = Amount Accrued (principal + interest),
P is the principal amount, r denotes the annual nominal interest rate in decimal form.
R = Annual nominal interest rate expressed as a percentage, R/100 = r.
n denotes the number of compounding periods

Further, in Maths Chapter 14, Compound Interest deals with problems related to compound interest, population growth, depreciation. Depreciation is defined as the loss of value of any entity over a period of time. For example, a car loses its market value after it has been purchased, and this loss of market value is known as depreciation.

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