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how to use the compound interest formula. In the formula for calculating compound interest the variables i and n have to be adjusted if the number of compounding periods is more than once a year. A the future value of the investmentloan including interest P the principal investment amount the initial deposit or loan amount r the annual interest rate decimal n the number of times that interest is compounded per unit t t the time the money is invested or borrowed for.
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Solve for the interest. P Initial value of investment 10000. The bank gives you a 6 interest rate and compounds the interest each month.
If there are 12 compounding periods we would raise our 102 to the 12th power to get 127.
I would choose option 1. If interest compounds more often than annually it is difficult to. A the future value of the investmentloan including interest P the principal investment amount the initial deposit or loan amount r the annual interest rate decimal n the number of times that interest is compounded per unit t t the time the money is invested or borrowed for. For years at compounded 4500 5 37 monthly The total amount accumulated after years is.
