September 4, 2009
No CommentsAn Introduction to Compound Interest
Description
This video explains how to use the compound interest formula and clearly explains all the different parts of it. Many example problems are given for compound interest and a few different methods of solving have been provided.
Overview
Compound interest is something that everyone will have to use at least once in their life. In order to solve compount interest, you need to use this formula:
A = P * [1 + (r/n)]^nt
A: Amount of money (final amount)
P: Principal amount of money (what you start out with)
r: Rate of interest (annual, written as a decimal)
n: Number of times interest is compounded per year
t: Time in years (for how long the money is deposited)
The formula can seem rather complicated, especially with so many different numbers and all of the decimal points. But as long as you follow the basic pattern of the formula and solve as you would any problem, you should have no problem with it.
