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What is the interest rate needed for an investment of 7000 to grow to an amount of 9500 in 3 years if interest is compound monthly?
The formula to calculate the present amount including compound interest is,
A = P(1 + r/n)nt , where P is the principal amount, r is the annual rate expressed as a decimal , t is the number of years, and n is number of times per year that interest is compounded.
9500 = 7000(1 + r/12)^(12 x 3) = 7000(1 + r/12)^36
Then, (1 + r/12)^36 = 9500 / 7000 = 1.3571429 approx
(1 + r/12) = 36√1.3571429 ≅ 1.0085189
r/12 = 0.0085189
r = 12 x 0.0085189 ≅ 0.1022268
Then the required interest rate is 10.223% (3dp)
What else can I help you with?
What is meant by the term compound interest?
Compound interest means that the amount of interest earned during a period increases the principal, which is then larger for the next interest period.
What is the total amount of money owed if 1250 was borrowed for four years at 3.5 interest?
Assuming Compound Interest I(n) = I(o)[1 + r/100]&(n) Where I(o) = 1250 r = 3.5% n = 4 years Substitutie I(4) = 1250[1 + 3.5/100]^(4) Hence I(4) = 1250 [ 1.035]^(4) I(4) = 1250[1.147523] I(4) = 1434.40 is the total amount owed. NB Compound interest is the usual business practice of calculating interest. NNB Payment would possibly be done on an monthly basis ; 1434.40 / 48 = 29.88 is paid each month .
What amount of compound interest can be obtained on an amount of rs 9650 at the rate of 6 pcpa at the end of 3 years?
Well, darling, if you want to know how much compound interest you'll get on Rs 9650 at a 6% rate over 3 years, I'll tell you straight. The formula for compound interest is A = P(1 + r/n)^(nt), where A is the amount, P is the principal, r is the rate, n is the number of times interest is compounded per year, and t is the time in years. Plug in those numbers and you'll find out the compound interest you're looking for. Just remember, math doesn't care about your feelings, honey.
Why is compound interest better than simple interest?
Compound interest is better than simple (or "nominal") interest because compound interest allows you to add your accumulated interest back to your total every given term (i.e. each day, each week, each month, quarterly, annually, etc.), thus increasing the amount of money you are earning interest on.Example:Say you deposit 100 dollars for 2 years at 10% per year in 2 banks, one which does not compound your interest (Bank A), and one that compounds annually (Bank B).Bank A:After 1 year: 100 x 1.10 (1.10 = your amount + 10%) = 110After 2 years: 100 x 1.20 (1.20 = your amount +10% x 2) = 120Bank B:After 1 year: 100 x 1.10 = 110but then instead of using 100 again, you add the additional 10 back into your total and collect interest on 110 dollars in year two.So:After 2 years: 110 x 1.10 (1.10 = your amount + 10%) = 121
Flowchart to find compound interest and amount?
start accept P ci =A-P A=P+i Print Ci Print C STOP
How to calculate compound interest using a monthly investment calculator?
A simple formula can be used to calculate the amount the dollar invested is worth over a monthly period. Use PV*(1+R)/N where PV is your present investment, R is your interest rate and N is the number of investment periods.
What is the effect of compound interest?
The effect of compound interest is that interest is earned on the accrued interest, as well as the principal amount.
After 6 years what is the total amount of a compound interest investment of 35000 at 4 percent interest compounded quarterly?
$44,440.71
How many variables are fundamental to all compound interest problems?
Three variables are fundamental to all compound interest problems: principal amount (initial investment), interest rate, and time period. These variables are used to calculate the compound interest accrued on an investment over time.
The concepts of simple interest and compound interest and how these affected the results of your investment exercise?
Simple interest (compounded once) Initial amount(1+interest rate) Compound Interest Initial amount(1+interest rate/number of times compounding)^number of times compounding per yr
Can you provide me with compound interest formula sheets?
The compound interest formula is A P(1 r/n)(nt), where: A the future value of the investment P the principal amount (initial investment) r the annual interest rate (in decimal form) n the number of times interest is compounded per year t the number of years the money is invested for You can use this formula to calculate the future value of an investment with compound interest.
What interest applies when interest for each year is based on the amount of the loan or investment?
When each interest calculation uses the initial amount, this is called Simple Interest. The other type is Compound Interest, which uses the current balance as the basis for interest calculation.
What is the PMT formula for compound interest and how is it calculated?
The PMT formula for compound interest is PMT P r (1 r)n / ((1 r)n - 1), where PMT is the monthly payment, P is the principal amount, r is the monthly interest rate, and n is the number of months. This formula calculates the fixed monthly payment needed to pay off a loan with compound interest over a specified period.
What is the compound interest formula with monthly deposits and how can it be used to calculate the growth of an investment over time?
The compound interest formula with monthly deposits is A P(1 r/n)(nt) PMT((1 r/n)(nt) - 1)/(r/n), where A is the future value of the investment, P is the initial principal, r is the annual interest rate, n is the number of compounding periods per year, t is the number of years, and PMT is the monthly deposit amount. This formula can be used to calculate how an investment grows over time by inputting the relevant values and solving for the future value.
What is the formula for calculating compound interest on a sum of money invested in a financial instrument over a period of time using sheets compound interest formula?
The formula for calculating compound interest on an investment is A P(1 r/n)(nt), where: A is the total amount after the time period, P is the principal amount (initial investment), r is the annual interest rate, n is the number of times interest is compounded per year, and t is the number of years the money is invested for.
How do you find the original investment when given the time and interest?
Not enough information. You also need to know: * The final amount of money * Whether simple or compound interest is known
Can you explain how compound interest works in stocks?
Compound interest in stocks refers to the process where the interest earned on an investment is added to the principal amount, allowing for the growth of the investment to accelerate over time. As the investment grows, the interest earned also increases, leading to a compounding effect that can result in significant returns over the long term. This compounding effect is a key factor in the growth potential of stock investments.
