Finance: Compound interest

Topic Notes
Now that we understand the concepts behind exponential growth and decay, let's utilize them and solve real-life problems! One of the many areas where exponential growth comes in handy is Finance. In this section, we will learn how compound interest helps us grow our deposits in our investment and/or bank accounts.
exponential growth/decay: Af=Ai(1+rn)nt { A_f = A_i (1+\frac{r}{n})^{nt}}

Af {A_f} : final amount
Ai {A_i} : initial amount
r {r} : Annual interest rate
t {t} : total time given in years
n {n} : number of times compounded in a year, if

Compound daily:

n = 365

Compound monthly:

n = 12

Compound quarterly:

n = 4

Compound semi-annually:

n = 2

Compound annually:

n = 1

Basic Concepts
Related Concepts