math110_compound_interest_notes

# Prepared and summarized by vera klimkovsky

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Unformatted text preview: d summarized by Vera Klimkovsky. Mathematics of Finance Compound Interest Compounding periods Interest may be compounded more than once a year: Semiannually (twice per year) Quarterly (four periods per year) Monthly (twelve periods) Daily (usually 365 periods per year) Compound Amount Formula: Note: This formula is used when interest is compounded more than once a year. is a number of compounding periods. Mathematics: Applications for Business Example: A developer needs \$80,000 to buy land. He is able to borrow the money at 10% per year compounded quarterly. How much will the interest amount to if he pays off the loan in 5 years? Solution: compounding periods per year. Based on custom edition “Math: Applications for Business.” Prepared and summarized by Vera Klimkovsky. Mathematics of Finance Compound Interest Then, and Mathematics: Applications for Business ( ) Continuous Compounding Formula: Note: This formula is used when interest is compounded continuously (i.e. at every given moment in ti...
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## This note was uploaded on 10/19/2011 for the course MATH 110 taught by Professor Staff during the Spring '11 term at S.F. State.

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