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The Power of Compounding (Interest (Simple (Interest paid only on the…
The Power of Compounding
Interest
Simple
Interest paid only on the original investment
Compound
Interest paid both on the original investment and on all interest added
Principle
Balance in which interest is paid
Compound Interest Formula (Once a Year)
A = P X (1 + APR)^Y
A=Accumulated balance after Y years
P= Starting Principle
APR= Annual Percentage Rate
Y= Number of Years
CPI Formula (n times a year)
A = P (1 + APR/n)^(nY)
Annual Percentage Yield (APY)
Actual percentage in which a balance increases a year
Continuous Compounding Formula
A = P X e^(APR X Y)