math110_compound_interest_notes

Prepared and summarized by vera klimkovsky

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

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...
View Full Document

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.

Ask a homework question - tutors are online