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Compound interest in Tally is a flexible calculator that displays the compound interest formula for any amount, and it's the only calculator you'll need to understand how easy compound interest is. This topic talks about the concept of compound interest in Tally erp9. It discusses how compound interest is defined and effects different variables like interest rate, principal, and annuity. The concept of compound interest is a mathematical rule which describes how an amount invested grows at a certain rate. This section discusses the conditional equation of the compound interest formula where P = Principal, A = Annual Interest Rate, t= Time in years P = A * t * t^-1/2 where t^-1/2 is the nth root of 1/t

In compound interest, the principal amount is invested at a fixed rate of interest. At the end of a period, the principal amount is multiplied by an exponential factor to calculate the balance of funds at the end of that period. When calculating compound interest on an investment, it must be divided into equal periods. The first period is one year and its number of months is set as 12. The second period is two years and its number of months is set as 24. In this way, every subsequent period will have a length that's a multiple number from 1 to 12.

Interest compounded monthly is the interest rate that you multiply the principle amount, which you have invested for a specified time period, with the number of months in the specified time period. In this case, if we have invested $500 for one year at a 5% interest rate and we have made 12 monthly payments, our total investment would be $5,000. In order to find what our total interest is, we would need to divide our total investments by 12 and then multiply it by 5% to get an answer of $500.

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