Compound Interest

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.

Front

How is Compound Interest calculated?

Back

Compound Interest = P(1 + r/n)^(nt) - P, where P = principal amount, r = annual interest rate (decimal), n = number of times interest applied per time period, t = number of time periods.

Front

What does 'compounded annually' mean?

Back

It means that the interest is calculated and added to the principal once a year.

Front

What does 'compounded monthly' mean?

Back

It means that the interest is calculated and added to the principal twelve times a year.

Front

What does 'compounded quarterly' mean?

Back

It means that the interest is calculated and added to the principal four times a year.

Front

What does 'compounded semi-annually' mean?

Back

It means that the interest is calculated and added to the principal twice a year.

Front

If Caiden deposits $475 at 3.8% compounded annually, what will be his balance after 15 years?

Back

$831.10

Front

If the Henley's take out a loan for $195,000 at 4.3% compounded annually, how much interest will they have paid after 30 years?

Back

$494,546.99

Front

If Mark takes a loan for $25,690 at 5.2% compounded monthly, how much total will he have paid after 5 years?

Back

$33,299.42

Front

If Riley invests $1,000 at 6.75% compounded semi-annually, how much interest will he earn in 15 years?

Back

$1,706.86