🚀 Day 23/150 – Compound Interest in Python

Understanding Compound Interest (CI) is a step ahead of simple interest and is widely used in finance, banking, and investments. It helps you see how money grows over time when interest is applied repeatedly.

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📌 Formula

Amount=P×(1+100R​)^T $$\text{<br>}\text{<br>}\text{<br>}\text{<span class="base"><span class="mord text"><span class="mord">Compound Interest</span></span><span class="mspace"></span><span class="mrel">=</span><span class="mspace"></span></span><span class="base"><span class="strut"></span><span class="mord text"><span class="mord">Amount</span></span><span class="mspace"></span><span class="mbin">−</span><span class="mspace"></span></span><span class="base"><span class="strut"></span><span class="mord mathnormal">P</span></span><br>}\text{<br>}$$

Where:

• P = Principal

• R = Rate of interest

• T = Time (years)

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🔹 Method 1 – Direct Calculation

P = 1000
R = 5
T = 2

Amount = P * (1 + R/100) ** T
CI = Amount - P

print("Compound Interest:", CI)
print("Total Amount:", Amount)

🧠 Explanation:

• (1 + R/100) calculates growth rate.

• ** T means power (compounding over time).

• Final amount includes interest, so we subtract P to get CI.

👉 Best for: Understanding the formula clearly.

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🔹 Method 2 – Taking User Input

P = float(input("Enter principal: "))
R = float(input("Enter rate: "))
T = float(input("Enter time (years): "))

Amount = P * (1 + R/100) ** T
CI = Amount - P

print("Compound Interest:", CI)

🧠 Explanation:

• Makes the program dynamic.

• Converts input into numbers using float().

👉 Best for: Real-life usage.

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🔹 Method 3 – Using a Function

def compound_interest(p, r, t): amount = p * (1 + r/100) ** t return amount - p print(compound_interest(1000, 5, 2))

🧠 Explanation:

• Encapsulates logic inside a function.

• Easy to reuse anywhere in your program.

👉 Best for: Clean and modular code.

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🔹 Method 4 – Using Lambda Function

ci = lambda p, r, t: p * (1 + r/100) ** t - p

print(ci(1000, 5, 2))

🧠 Explanation:

• One-line function using lambda.

• Great for short calculations.

👉 Best for: Quick operations.

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⚡ Key Takeaways

• Compound interest grows exponentially, unlike simple interest.

• Use ** for power calculations in Python.

• Formula: P * (1 + R/100) ** T

• CI = Amount - Principal

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💡 Pro Tip

Enhance this program by:

• Adding number of times interest is compounded per year

• Rounding output using round(value, 2)

• Building a mini finance calculator combining SI + CI

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🔥 Final Thought

Compound interest is one of the most powerful concepts in finance — and now you know how to implement it in Python!

Keep building 🚀