If you were to invest $100,000 at a fixed rate of 6% APR, compounded monthly, at the end of ten years, the investment would be worth $105114.013.
Compound interest is the term used to describe interest that is earned on interest. This may be shown using simple math: if you have $100 and it earns 5% interest every year, you will have $105 at the end of the first year. At the end of the second year, you'll have $110.25.
After multiplying the initial principle by these two factors, the yearly interest rate is raised to the number of compound periods minus one. The resulting value is then deducted from the total initial loan amount.
Amount= P X [tex](1 + r)^{n}[/tex]
Where,
P= $100,000
r= 6/12% = 1/200
n= 10 years
Putting values in the formula
Amount= $100,000 X [tex](1 + \frac{1}{200} )^{10}[/tex]
A = $1,00,000 X [tex](1 + \frac{201}{200} )^{10}[/tex]
A = $105114.013
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