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Compound Interest (FV=4000(1+0.06/4)^4(5)
FV 4000(1.015)^20
FV 4000(1…
Compound Interest
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To solve compound interest problems, we need to take the given information at plug the information into the
compound interest formula and solve for the missing variable. The method used to solve the problem will
depend on what we are trying to find. If we are solving for the time, t, then we will need to use logarithms
because the compound interest formula is an exponential equation and solving exponential equations with
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The mathematical formula for calculating compound interest depends on several factors. These factors
include the amount of money deposited called the principal, the annual interest rate (in decimal form), the
number of times the money is compounded per year, and the number of years the money is left in the bank.
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