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Monthly Compound Interest Formula

When a sum of money is borrowed for a period, an extra amount has to be paid along with the borrowed money. The fixed rate of the extra amount is called interest. Compound interest is the total interest that includes the original interest and the interest of the new principal which is obtained by adding the original principal to the due interest. For monthly compound interest, the interest in compounded all months in a year.

The Monthly Compound Interest Formula is given as,

Related Calculators
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Compound Daily Interest Calculator
 

Monthly Compound Interest Problems

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The solved problems on monthly compound interest are given below:

Solved Examples

Question 1: A sum of Rs 5000 is borrowed and the rate is 8%. What is the monthly compound interest for 2 years?
Solution:
 
Monthly Compound Interest = Principal$(1+\frac{Rate}{12})^{12*Time}$ - Principal
Monthly Compound Interest = 5000$(1+\frac{8}{100*12})^{2*12}$ - 5000
Monthly Compound Interest = 5000 * 1.179 - 5000
Monthly Compound Interest = 864.439
The monthly compound interest for 2 years is Rs 864.439
 

Question 2: A sum of Rs 20000 is borrowed and the rate is 10%. What is the monthly compound interest for 5 years?
Solution:
 
Monthly Compound Interest = Principal$(1+\frac{Rate}{12})^{12*Time}$ - Principal
Monthly Compound Interest = 20000$(1+\frac{10}{100*12})^{5*12}$ - 20000
Monthly Compound Interest = 20000 * 1.645 - 20000
Monthly Compound Interest = 12906.179
The monthly compound interest for 5 years is Rs 12906.179
 

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