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Solving Compound Interest Problems
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COMPOUND INTEREST
Since this section involves what can happen to your money, it should be of INTEREST to you!
COMPOUND INTEREST DEFINITION
Interest is paid on the principal and accumulated interest
COMPOUND INTEREST FORMULA
amount at the end
Principal(amount at start)
annual interest rate
(as a decimal)nt
n
rPA
1
time(in
years)
number of times per year that interest in
compounded
nt
n
rPA
1500
.08
4
4 (2)
83.585$A
Find the amount that results from $500 invested at 8% compounded quarterly after a period of 2 years.
Example
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