Compute Compound Interest Math

Compound interest or interest on interest is calculated with the compound interest formula.

Compute compound interest math. Suppose you give 100 to a bank which pays you 10 compound interest at the end of every year. The basic formula for compound interest is. M 1000 1 0 05 3 1157 62. After one year you will have 100 10 110 and after two years you will have 110 10 121.

Compound interest formulas and calculations. A p 1 r n n t a 1 000 000 1 06 12 12 5 a 1 000 000 1 0 005 12 5 a 1 000 000 1 005 60 a 1 348 850 15. P a 1 r n nt. Fv pv 1 r n.

R n a p 1 nt 1 calculate rate of interest in percent. Pv fv 1 r n. Calculate rate of interest in decimal solve for r. Calculate principal amount solve for p.

R r 100. The formula for compound interest is p 1 r n nt where p is the initial principal balance r is the interest rate n is the number of times interest is compounded per time period and t is the number of time periods. I would choose option 1. Your 1000 would grow to be 1157 62 after three years.

N number of periods. Here s how you would get that answer using the formula and applying it to the known variables. For example let s say that you have 1000 to invest for three years at a 5 percent compound interest rate. And by rearranging that formula see compound interest formula derivation we can find any value when we know the other three.

Fv future value pv present value r interest rate as a decimal value and. Finds the future value where.