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whats the formula for interest the one were u can calculate how much u can have in like 20 year

2007-05-02 18:20:59 · 7 answers · asked by Anonymous in Science & Mathematics Mathematics

7 answers

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 · answer #1 · answered by Yuko 3 · 0 0

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 × (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 · answer #2 · answered by Pam 5 · 0 0

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 · answer #3 · answered by Anonymous · 0 0

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 · answer #4 · answered by Anonymous · 0 0

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 · answer #5 · answered by doug_donaghue 7 · 0 0

A=Pe^rt

2007-05-03 01:23:42 · answer #6 · answered by shiva M 1 · 0 0

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 · answer #7 · answered by justforthisonepost 3 · 0 0

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