Model 2: Compounding Periods

04 Try it yourself Interactive

The same rate, added at different intervals

Set a principal, a nominal rate and a time, then change only the frequency. The first step always states the rate per period and the period count explicitly, because writing those two numbers down is what prevents the model’s signature error. Compare the final amounts across the four frequencies.

₹1,000 at 10% for 2 years, half-yearly

5% × 4 periods · 1,215.51

Note how much the amount rises going from annual to half-yearly, and how little it rises again going from quarterly to monthly.

Press Next to work through it one step at a time.

Rate / period–

Periods–

Interest–

Balance–

step 0 / 0