Compound Interest

Mastering Compound Interest: Formulas, Calculations, and Strategies compound interest formula

Compound interest is calculated by multiplying the initial principal amount by one plus the annual interest rate multiplied by the number of compound periods

formula 1688 Single Payment Compound Interest Formulas · F = $1,000 + $600 = $1,600 · F = $1,000 10 = $1,791 · F = $1,000 6 = $1,772 · F = $1,000 Derivation Let us consider the principle as “P” and rate of interest as “R” At the end of first compounding period, the simple interest on principal is P*r interest, where you only pay interest on the original amount) This is how it is calculated: £ 400 is borrowed for three years at 5 % compound interest

7 dog The simple interest formula is linear: I = P r n I=Prn I=Prn while the compound interest formula is non-linear: A = P n A=P^{n} A=Pn in