Problem Suppose 5000 dollars is deposited in an account that earns compound interest that is done annually. Formula to calculate compound interest. You need the beginning value interest rate and number of periods in years.
How to calculate it depends on the type of financial instrument the type of rate used APR or APY the number of compounding periods and other factors.
Problems that ask you to solve for the rate r in the compound interest formula require the use of roots or creative use of exponents. A P 1 r n n t A 1 000 000 1 06 12 12 5 A 1 000 000 1 0005 12 5 A 1 000 000 1005 60 A 1 348 85015. In simple in it also written as Simple Interest rate PRT100. I would choose option 1.