0
I believe you mean, how is the equation derived. It is actually quite simple. Every time you add (for example) 5%, the capital increases by a factor of 1.05. This factor is calculated as 1 + 5/100, in this example. Multiplying repeatedly by this factor is equivalent to raising the factor to a power. For example, in 4 years, and assuming an initial capital of 1000, you get 1000 x 1.05 x 1.05 x 1.05 x 1.05, which is the same as 1000 x 1.054.
Wiki User
∙ 11y ago
Add your answer:
Earn +20 pts
What is the equation to find compound interest?
If the rate of annual interest is r% the period is n years and the amount invested is y Then the compound interest is y*(1+r/100)^n - y
Which equation could you use tofind the nth term of a compound-interest sequence?
S=P(1+r)^n
What is the equation for determining compound interest?
A=Pe^rt A=Total Invested P=Principal r=Rate t=time
What are the major differences between compound interest loan and simple interest loan?
With compound interest, the interest due for any period attracts interest for all subsequent periods. As a result, compound interest, for the same rate, is greater.With compound interest, the interest due for any period attracts interest for all subsequent periods. As a result, compound interest, for the same rate, is greater.With compound interest, the interest due for any period attracts interest for all subsequent periods. As a result, compound interest, for the same rate, is greater.With compound interest, the interest due for any period attracts interest for all subsequent periods. As a result, compound interest, for the same rate, is greater.
What are some of the uses of compound interest in business?
compound interest increases interest more than simple interest
What is the equation to find compound interest?
If the rate of annual interest is r% the period is n years and the amount invested is y Then the compound interest is y*(1+r/100)^n - y
Which equation could you use tofind the nth term of a compound-interest sequence?
S=P(1+r)^n
What is the equation for determining compound interest?
A=Pe^rt A=Total Invested P=Principal r=Rate t=time
Which type of interest is calculated by adding the interest earned to the principal?
compound... yes it is compound interest.
What is the calculation for a simple compound interest rate?
There is simple interest and there is compound interest but this question is the first that I have heard of a simple compound interest.
What are the major differences between compound interest loan and simple interest loan?
With compound interest, the interest due for any period attracts interest for all subsequent periods. As a result, compound interest, for the same rate, is greater.With compound interest, the interest due for any period attracts interest for all subsequent periods. As a result, compound interest, for the same rate, is greater.With compound interest, the interest due for any period attracts interest for all subsequent periods. As a result, compound interest, for the same rate, is greater.With compound interest, the interest due for any period attracts interest for all subsequent periods. As a result, compound interest, for the same rate, is greater.
Is the interest accrued on a student loan simple or compound interest?
its compound interest
What are some of the uses of compound interest in business?
compound interest increases interest more than simple interest
Which of the two is exponential function the simple or the compound interest?
Compound interest.
WHAT does the carrot in the formula for compound interest means?
There is no carrot in the compound interest formula!
How do you solve compound interest formula for n?
It depends on which compound interest formula you mean. Refer to the Wikipedia Article on "Compound Interest" for the correct terminology.
What is earning interest on interest called?
Compound interest
