MA129 Lecture Notes - Lecture 7: Formula 5000, Interest, Compound Interest

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Department
Course
Professor
Lecture 7 - Interest and Logs
Simple Interest
Interest earned formula:
I = Prt
Amount earned formula:
A = P + I
Compounding interest formula:
A = 𝑃 ( 1 + 𝑃/𝑃 )𝑃𝑃
Ex.
You have $5000 at 4% per annum, how much will you have after 3 years?
I = Prt
I = (5000)(0.04)(3)
= 600
*To find how much we have total after 3 years we need to add the interest plus principle, which
is the amount earned formula
= 5000 + 600
= $5600
Ex.
$25,000 is borrowed for 5 years at 6% compound interest. Compounded quarterly, and again
semi annually. Find the interest earned on each.
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