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what is the equation for interest compounded annually. One very important exponential equation is the compound -interest formulawhere A is the ending amount P is the beginning amount or principal r is the interest rate expressed as a decimal n is the number of compoundings a year and t is the total number of years. An amount of 150000 is deposited in a bank paying an annual interest rate of 43 compounded quarterly.
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Following is the formula for calculating compound interest when time period is specified in years and interest rate in per annum. N is the number of times interest is compounded in a year. Or lets say 100 is the principal of a loan and the compound interest rate is 10.
This formula makes use of the mathemetical constant e.
Where. An amount of 150000 is deposited in a bank paying an annual interest rate of 43 compounded quarterly. In order to calculate the value of the investment after the period of 3 years annual compound interest formula will be used. N number of compounding periods per unit t.
