For simple interest use:
A = Pe^(rt)
For compound interest, use:
A = P[ 1 + (r/t) ]^(t n)
In each equation:
A is the amount after a certain period of time.
P is the principle, or original amount.
r is the interest rate.
t is the amount of time that passes. (there are two t's in the second equation and they should be in the same units)
n (in the second equation) is the amount of times the interest is compounded in that amount of time.
2007-05-02 18:29:05
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answer #1
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answered by Yuko 3
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SIMPLE INTEREST
Formula for calculating simple interest:
I = Prt
Where,
I = interest
P = principal
r = interest rate (per year)
t = time (in years or fraction of a year)
http://www.moneyinstructor.com/art/simpleinterest.asp
Compound interest is paid on the original principal and on the accumulated past interest.
Formula:
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.
When the interest is compounded once a year:
A = P(1 + r)^n
However, if you borrow for 5 years the formula will look like:
A = P(1 + r)^5
This formula applies to both money invested and money borrowed.
Frequent Compounding of Interest:
What if interest is paid more frequently?
Here are a few examples of the formula:
Annually = P Ã (1 + r) = (annual compounding)
Quarterly = P (1 + r/4)^4 = (quarterly compounding)
Monthly = P (1 + r/12)^12 = (monthly compounding)
http://math.about.com/library/weekly/aa042002a.htm
Continuous Compound Interest
When interest is compounded continually (i.e. n --> ), the compound interest equation takes the form:
P = C e^(rt)
http://www.math.com/tables/general/interest.htm
2007-05-03 01:27:56
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answer #2
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answered by Pam 5
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P is the principal (the money you start with, your first deposit)
r is the annual rate of interest as a decimal (5% means r = 0.05)
n is the number of years you leave it on deposit
A is how much money you've accumulated after n years, including interest.
If the interest is compounded once a year:
A = P(1 + r)n
If the interest is compounded q times a year:
A = P(1 + r/q)nq
2007-05-03 01:23:58
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answer #3
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answered by Anonymous
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It depends on what kind of interest and how often it's compounded.
P= initial principle
r= interest rate
t=time or number of periods
simple interest is P*(1+rt)
more common is compound interest which is
P*(1+r)^t
for example 8% interest compounded annually for 20 years would be:
P*(1+.08)^20=P*4.066
now 8% compounded annually is 2% per quarter for 80 quarters which would be:
P*(1+.02)^80=P*4.86
if it is compounded continuously the formula is
P*e^rt at 8% it would be
P*e^(.08*20)=P*4.95
2007-05-03 01:31:57
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answer #4
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answered by Anonymous
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p(1+r)^n
where p is principle value, r is the rate, and n is the number of interest accrueing periods.
HTH
Doug
2007-05-03 01:24:51
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answer #5
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answered by doug_donaghue 7
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A=Pe^rt
2007-05-03 01:23:42
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answer #6
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answered by shiva M 1
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you are on the computer now...why not just type "calculate intrest" into the yahoo search engine?
man, you people amaze me
2007-05-03 01:26:52
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answer #7
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answered by justforthisonepost 3
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