Compound Interest - Identify Variables

Front

What is Compound Interest?

Back

Compound interest is the interest on a loan or deposit calculated based on both the initial principal and the accumulated interest from previous periods.

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What does the variable P represent in the compound interest formula?

Back

P represents the principal amount, which is the initial amount of money invested or borrowed.

Front

What does the variable r represent in the compound interest formula?

Back

r represents the annual interest rate (in decimal form) applied to the principal.

Front

What does the variable t represent in the compound interest formula?

Back

t represents the time the money is invested or borrowed for, usually expressed in years.

Front

What does the variable n represent in the compound interest formula?

Back

n represents the number of times that interest is compounded per year.

Front

What is the formula for calculating compound interest?

Back

A = P(1 + r/n)^(nt), where A is the amount of money accumulated after n years, including interest.

Front

If $2000 is invested at a 2% interest rate compounded annually for 13 years, what is the expression to calculate the total amount?

Back

2000(1 + 0.02)^(13)