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compound interest formula problem. COMPOUND INTEREST FORMULA A P 1 r n n t Where A is the account balance P the principal or starting value r the annual interest rate as a decimal n the number of compoundings per year and t the time in years. Putting these values into the formula above gives us.
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I would choose option 1. The compound interest formula can be used to calculate the value of such an investment after a given amount of time or to calculate things like the. A 2000 1 003 1 2060.
Solution B P 1 r n P 495 r 3 annual interest rate 1 interest period 3 annual interest rate n number of payment periods number of interest periods times number of years n 1 times 3 3.
That earns 2 compound interest that is done annually r 002. The bank gives you a 12 interest rate and compounds the interest every 2 months. So mathematically if our rate of interest is r then for 2 years. Lets solve a few compound interest problems.
