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what is the formula for compound interest if compounded annually. Suppose an account with an original balance of 1000 is earning 12 per year and is compounded monthly. Typically compounding occurs either annually semi-annually or quarterly.
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Simple interest refers only to interest earned on the principal balance. N the number compounding periods per year n 1 for annually n 12 for monthly etc t the time in years or fraction of years multiples of 1n. Interest can be compounded on.
Compound Interest Formula P principal amount the initial amount you borrow or deposit r annual rate of interest as a decimal t number of years the amount is deposited or borrowed for.
A Accrued Amount principal interest P Principal Amount. Thats the big idea of compound interest. The compound annual growth rate CAGR shows the rate of return of an investment over a certain period of time expressed in annual percentage terms. R is also known as rate of return.
