MATH 120 Lecture 2: Chapter 5.2 Compound Interest (For Real)
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Professor brendan sheehan chapter 5. 2 compound interest (for real) So last time, we learned how to do simple and compound interest. There"s actually more to the compound interest equation. Here"s what we started with: a = p(1 + rt) Here"s the new equation: a = p n (1 + i) i = interest. # of compounds n = (# of years)(# of compounds) Compound interest usually takes into account the number of years, which this new equation will do for us. Best way to think of it is the amount of payments within a year. We"ll discuss this in a few sample problems. Suppose that ,000 is invested at 6% interest. Find the amount of money in the account after 3 years if the interest is compounded annually. So, there is only one compound because it is compounded annually. This means that there is one payment every year. The # of compounds is 1 for this problem.
