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Compound Interest Calculation

Pascal's triangle can be used to calculate compound interest by representing the interest calculation formula as coefficients taken from the triangle. For example, with principal of Rs. 1000, interest rate of 10% for 3 years: 1) The amount after 3 years is Rs. 1331, following the coefficients 1, 3, 3, 1 from Pascal's triangle 2) The compound interest of Rs. 331 is calculated by removing the first term For 2 years, the amount would be Rs. 1210 and interest Rs. 210, using coefficients 1, 2, 1 from the triangle.

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617 views2 pages

Compound Interest Calculation

Pascal's triangle can be used to calculate compound interest by representing the interest calculation formula as coefficients taken from the triangle. For example, with principal of Rs. 1000, interest rate of 10% for 3 years: 1) The amount after 3 years is Rs. 1331, following the coefficients 1, 3, 3, 1 from Pascal's triangle 2) The compound interest of Rs. 331 is calculated by removing the first term For 2 years, the amount would be Rs. 1210 and interest Rs. 210, using coefficients 1, 2, 1 from the triangle.

Uploaded by

bilalak1990
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
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Pascal's Triangle for computing Compound Interest (CI) The traditional formula for computing CI is CI = P*(1+R/100)^N - P Using Pascal's

Triangle,

Number of Years (N) ------------------1___________1 2_________ 1 2 1 3 ________ 1 3 3 1 4 ________1 4 6 4 1 Eg: P = 1000, R=10 %, and N=3 years. What is CI & Amount? Step 1: Amount after 3 years = 1 * 1000 + 3 * 100 + 3 * 10 + 1 * 1 = Rs.1331 The coefficients - 1,3,3,1 are lifted from the Pascal's triangle above. Step 2: CI after 3 years = 3*100 + 3*10 + 3*1 = Rs.331 (leaving out first term in step 1) If N =2, we would have had, Amt = 1 * 1000 + 2 * 100 + 1 * 10 = Rs.1210 CI = 2 * 100 + 1* 10 = Rs.210

This is just an example u can try for more no. of yrs or different values including negatives if % growth is given for yrs(over the previous) lets say 2001 _ 2002 _ 2003 _ 2004 1 _____ 2 ____ 3 _____ 4 overall % growth in 2004 over 2000 would be 10.355024 solution:- multiplication of 4 no.s together considering base as 100 ( no.s should be nearby 100) 101 = 100 + a 102 = 100 + b 103 = 100 + c 104 = 100 + d ____

---110------35-------50------24 100+S(a)---S(ab)--S(abc)---S(abcd) S = sigma , S(ab) = Sum of pdt of no.s taken two at a time!!!!! this case is valid of any no. of products or any number u can take in place of a b c d negatives included.... so if numbers are small just like 1 2 3 4 here then u can neglact the no,s 50 and 24 as they will not be needed and directly can say that growth is 10.35% ********Care to be taken all the S should be placed there in 2 digit form so if no. of digit is less (example - 2*3 = 06) add 0 to it and make it 2 digit no. and if S is of 3 digit then take a carry to next no. example 110 105 103 _______ 118 95 150 so answer would be 1189650 or simply 18.97 growth!!!!

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