Compound Interest Formula
The formula for compound interest is defined as:
where:
S = Final Dollar Value
P = Principal Dollars Invested
r = Annual Interest Rate
n = Number of Times Interest Compounded Per Year
t = Investment Time in Years
A businessman invests $10,000 into a fund that pays an annual interest rate of 7% compounded quarterly. How much does he have after five years?
S = Final Dollar Value
P = Principal Dollars Invested
r = Annual Interest Rate
n = Number of Times Interest Compounded Per Year
t = Investment Time in Years
Example:
A businessman invests $10,000 into a fund that pays an annual interest rate of 7% compounded quarterly. How much does he have after five years?
Solution:
