📈 Class 8 · Commercial maths

Compound Interest for Class 8: notes, worked examples and practice

With compound interest you earn interest on your interest, so money grows faster than with simple interest. It is how savings, loans and populations really grow.

Updated 21 October 2026. Every worked example and answer on this page is checked by automated tests.

Try the practice questions WhatsApp a maths teacher

Notes

Compound Interest: what you need to know

Chapter names and order differ by board and textbook edition, so follow your own textbook for the order.

Interest on interest

With simple interest only the principal earns interest. With compound interest the interest is added to the principal each year and earns interest too.

The formula

Amount A = P × (1 + R/100)ⁿ, where n is the number of years. Compound interest CI = A − P.

Year-by-year method

Find the interest for year 1, add it to the principal, then repeat. For small values of n this is easy to follow.

Half-yearly compounding

If interest is added every six months, use rate R/2 and 2n periods: A = P(1 + R/200)²ⁿ.

Growth and depreciation

The same idea works for population growth and for things that lose value. Depreciation: value = P × (1 − R/100)ⁿ.

Formulas and rules to remember

A = P(1 + R/100)ⁿ
CI = A − P
Half-yearly: A = P(1 + R/200)²ⁿ
Depreciation: V = P(1 − R/100)ⁿ

Solved examples

Example 1

Find the compound interest on ₹10,000 for 2 years at 10% per year, compounded yearly.

A = 10000 × (1.1)² = 10000 × 1.21 = 12100.
CI = 12100 − 10000 = ₹2,100.

Answer: ₹2,100

Example 2

Find the amount on ₹5,000 for 2 years at 20% per year compounded yearly.

A = 5000 × (1.2)² = 5000 × 1.44.
= 7200.

Answer: ₹7,200

Example 3

Find the difference between the compound interest and the simple interest on ₹10,000 at 10% for 2 years.

CI = ₹2,100 and SI = 10000 × 10 × 2 ÷ 100 = ₹2,000.
Difference = 2100 − 2000 = ₹100.

Answer: ₹100

Example 4

A machine worth ₹50,000 loses 10% of its value every year. What is it worth after 2 years?

Value = 50000 × (0.9)² = 50000 × 0.81.
= 40500.

Answer: ₹40,500

Avoid these

Common mistakes

Using the simple interest formula

Compound interest is not P × R × T ÷ 100. Interest is added to the principal each year.

Forgetting to subtract the principal

The formula gives the amount. CI = A − P.

Using n = years for half-yearly compounding

For half-yearly, use R/2 and 2n periods.

Rounding too early

Keep full values until the last step.

10 practice questions with answers

Try each question on paper first, then tap it to check your answer. The questions are generated by code and each answer is checked.

Find the compound interest on ₹6,000 for 2 years at 20% per year, compounded yearly. (in ₹)
Answer: 2640
Find the amount on ₹9,000 for 2 years at 10% per year, compounded yearly. (in ₹)
Answer: 10890
Find the compound interest on ₹4,000 for 2 years at 10% per year, compounded yearly. (in ₹)
Answer: 840
Find the compound interest on ₹1,000 for 2 years at 10% per year, compounded yearly. (in ₹)
Answer: 210
Find the amount on ₹3,000 for 2 years at 10% per year, compounded yearly. (in ₹)
Answer: 3630
Find the compound interest on ₹3,000 for 2 years at 10% per year, compounded yearly. (in ₹)
Answer: 630
Find the simple interest on ₹8,000 at 10% per year for 4 years. (in ₹)
Answer: 3200
A sum of ₹5,000 earns ₹500 simple interest in 2 years. The rate of interest per year (in %) is
Answer: 5
Find the amount to be repaid on ₹3,500 borrowed at 12% simple interest per year for 3 years. (in ₹)
Answer: 4760
A sum of ₹5,000 earns ₹500 simple interest at 5% per year. The time (in years) is
Answer: 2

More practice

Printable worksheets (PDF with answers)

Percentage of a number (Grade 5)
Percentage increase and decrease (Grade 7)

Games and lessons

Online maths practice

Maths dictionary

Simple & compound interest calculator

Compare simple and compound interest on any amount, with yearly, half-yearly, quarterly, monthly or daily compounding and a year-by-year table.

Use the tool →

EMI calculator

Monthly EMI, total interest and total payment for any loan, with a year-by-year and month-by-month repayment schedule.

Use the tool →

FAQ

Compound Interest Class 8: questions students ask

What is the formula for compound interest?

A = P(1 + R/100)ⁿ for the amount, and CI = A − P for the interest.

How is compound interest different from simple interest?

Compound interest is also earned on interest already added. Simple interest is only on the original principal.

How do I calculate half-yearly compound interest?

Halve the rate and double the number of years in the formula.

Does compound interest work for population growth?

Yes. The same formula describes anything that grows by a fixed percentage each period.

Which board is this compound interest page for?

It covers the ideas taught in CBSE, ICSE and state-board maths. Chapter names and order differ by board and textbook edition, so follow your own textbook for the exact order.

Need help with compound interest?

Tell us the class, board and what feels hard. We match a maths teacher from our network and confirm the format before anything is booked.

Tell us the learner’s age or grade and goals
We’ll suggest a suitable class or learning path
We’ll confirm format, timing and fees with a parent or guardian

Play it, don't just read it

Try it now: Percentage of a number

Eight quick questions with instant feedback. Your score is saved on this device and counts in the games and learning paths too.

All free games →

Percentage of a number (Grade 5): Finding 10%, 25%, 50% and other percentages of a number. Open the practice page or print a worksheet.

Or play a game

Today's maths challengeFive questions · the same for everyone today · keep your streak goingPlay