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Simple interest 560.
Simple compound interest formula math. So after six months there will be 1061 52 in the account. Here i r m 0 12 12 and n 6 as each month is one period. But then the longer we go the more it diverges and it does much much better than simple interest does. By the end of this graph notice that the compound interest payment the compound interest total is over 1 000 more.
There are other types of questions that can be answered using the compound interest formula. A p 1 r m m t 3500 1 0 015 4 4 2 3606 39. The effect of time. R fv pv 1 n 1.
Simple and compound interest. Compound interest principal 1 rate time principal. So compound interest 4000 1 7 100 2 4000. We use the compound interest formula a n p 1 i n.
The simple interest for 2 years is rs. Pv fv 1 r n finds the present value when you know a future value the interest rate and number of periods. Simple interest 4000 7 100 2. So in the short term it does a little bit better than simple interest.
The value after 2 years will be 3 606 39. And by rearranging that formula see compound interest formula derivation we can find any value when we know the other three.
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