How can I calculate compound interest?

Question

Iwish to calculate interest paid on investments eg £700 @6%for 5years Is there a formula

Answer 1

The formula to calculate compound interest is P multipled by (1+R/100) raise power 'n' minus P.Here P is the principal amount,R is the rate of interest and 'n' is the number of years.Thus in the example given by you the compound interest will be 700 multiplied by 1.06 raise power 5,minus 700.After calculations 700 multiplied by 1.06 raise power 5 comes to the amount of 936 pounds and 75 pence.Thus the compound interest which will be arrived at by reducing the principal amount of 700 pounds comes to 236 pounds and 76 pence.

Answer 2

M = P( 1 + i )^n

M is the final amount including the principal.

P is the principal amount.

i is the rate of interest per year.

n is the number of years invested

m = 700(1+0.06)^5 = £936.76

Answer 3

In general Future Value = Amount x (1+rate) ^ years (if you mean a single investment at the beginning). (^ means exponentiation)

Otherwise an investment of Amount EACH year, an annuity, with the goal of computing a FUTURE value is done with...

Future Value = Amount x ((1+rate) ^ years -1)/rate

This is done automatically with some "financial" calculators but a scientific with exponentiation is all you minimally need.

Answer 4

The formular is A = P(1 + r)n

P is the principal (the initial amount you borrow or deposit)

r is the annual rate of interest (percentage)

n is the number of years the amount is deposited or borrowed for.

A is the amount of money accumulated after n years, including interest.

You can visit the below website for more compound interest information:
http://math.about.com/library/weekly/aa042002a.htm
http://www.pa.uky.edu/~minli01/cs650/interest.htm

Answer 5

you need to know the frequency of the coumpounding rate you're using. many banks will say 6% annual with quarterly compounding or daily.
when you find that you do:
700 x (1 + 6%/(number of compounding periods in 1y))^(number of compounding periods in 5y)

for example if it's 6% annual rate compounding quartely you need to use a 1.5% rate in the formula and power it to 20.

hope that helps

Answer 6

P principal ,r is % interest rate and n years, compound rate

= P ( 1+ r/100) raise to power n

Answer 7

Assume £100.
Interest on 1st year @ 10% = £100 + £10 = £110
Interest on 2nd year @ 10% = £110 + £11= £121
and so on ad infinitum....

Answer 8

learn the rule of 72...divide the interest rate by 72 and that is the number of years it takes to double your money. Great place to start

Answer 9

(1 + rate/100)^number of years * original amount

or in your case:

(1 + 6/100)^5 * 700


Hope this helps!

Answer 10

i think u will find help in

http://www.fagr.org/

i hope this can help