When the interest is compounded yearly, the formula for finding the Amount is:
When the rates of successive years are different then:
where are the interest rates for successive years.
When the interest is compounded half yearly (which means every six months or two times a year)
. Here the rate of interest is divided by 2 and the number of years are multiplied by 2.
Similarly, if the interest is compounded quarterly, we would get the following formula.
. Here the rate of interest is divided by 4 and the number of years are multiplied by 4.
This formula can be used to to calculate growth of anything. Growth of industries, population, production, number of trees, revenue etc. For example, if production grows are r% every year, then the production output in n years would be calculated as follows:
where A is the final production, P is the initial production and n is the number of years that we are using.