Compound Interest (notes)

Compound Interest

​earnings paid on the principal and the accumulation of interest from previous periods.

​Formula:

​A=P(1+r)^t

​A = amount

Total balance​

​P = principal

Amount of money started with ($)​

​R = rate

(%) as a decimal​

​T = time

Time in years​

​Ex. 1) Rachel deposited $10 in an account earning 5% interest compounded annually. To the nearest cent, how much will she have in 3 years?

​A=P(1+r)^t

​

A=

​

A=​

​Ex. 4) Brooke has $7 in an account that earns 10% interest compounded annually. To the nearest cent, how much interest will she earn in 2 years?

​A=P(1+r)^t

​

A=

​

A=​

​Interest earn(ed) = A - P

​

I =

​

I =​