Compound Interest Rate Maths

Solution earns 3 compounded monthly.

Compound interest rate maths. If you deposit 1 000 in a bank account which is paying 3 compound interest per year. To calculate compound interest use the formula below. Going backwards to work out the present. To answer this question you begin by working out 5 of 250 which 12 50.

Using the compound interest formula calculate principal plus interest or principal or rate or time. Includes compound interest formulas to find principal interest rates or final investment value including continuous compounding a pe rt. A p 1 r n. Compound interest make a formula.

Free practice for sat act and compass maths tests a principal of 2000 is placed in a savings account at 3 per annum compounded annually. The rate is r 0 03 and the number of times compounded each year is m 12 initial investment of 5 000. Compound interest is when a bank pays interest on both the principal the original amount of money and the interest an account has already earned. Compound interest problems with answers and solutions are presented.

Amount after n years starting amount x multiplier n you re asked to calculate the amount after 3 years with 4500 and a 4 compound interest rate. The main issue is to change the 104 to 1 04 and then you can plug the numbers directly into your calculator these type of gcse questions are generally on the calculator paper. Plus the principal of 1 000 means alex needs to pay 1 420 after 7 years. There is a formula for simple interest.

How much is in the account after one year two years and three years. Pounds 40 5 pounds 40 pounds 2 pounds 42. Remember it because it is very useful. We could do the.

N is the number of years the amount is deposited or borrowed for. A p 1 r 5. When the interest is compounded once a year. The initial amount is the principal p 5000 6 years.

In the formula a represents the final amount in the account after t years compounded n times at interest rate r with starting amount p. Calculate the interest on borrowing 40 for 3 years if the compound interest rate is 5 per year. Alex borrows 1 000 for 7 years at 6 simple interest. To calculate the amount of simple interest over 5 years you simply multiply the interest earnt in year one by five 12 5 5 62 5.

So adding 10 interest is the same as multiplying by 1 10 now here is the magic. However if you borrow for 5 years the formula will look like.