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how to solve a compound interest. Finds the Present Value when you know a Future Value the Interest Rate and number of Periods. This formula applies when interest is earned on an annual basis and the interest is earned once a year.
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PV FV 1rn. Compound Interest is calculated on the initial payment and also on the interest of previous periods. The magic of compounding interest turned 25000 into 10804856.
And by rearranging that formula see Compound Interest Formula Derivation we can find any value when we know the other three.
That earns 2 compound interest that is done annually r 002. P the principal investment amount the initial deposit or loan amount r the annual interest rate decimal n the number of times that interest is compounded per unit t. Lets look at the quantities in the problem statement. Compound It Compound Frequency Annually Semiannually Monthly Daily.
