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