Compound Interest

Compound Interest - Thus, the total after one year is...

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

View Full Document Right Arrow Icon
Compound Interest Here are some examples for calculating compound interest in word problems.   Example 1 What will be the final total amount of money after three years on an original investment of $1,000 if a  12% annual interest rate is compounded yearly? First, circle what you must find—  final total amount of money.  Note also that interest will be  compounded each year.  Therefore, the solution has three parts, one for each year. 
Background image of page 1
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: Thus, the total after one year is $1,000 + $120 = $1,120. Note that the principal at the beginning of the second year was $1,120. Thus, the total after two years is $1,120 + $134.40 = $1,254.40. Note that the principal at the beginning of the third year was $1,254.40. Thus, the total after three years is $1,254.40 + $150.53 = $1,404.93....
View Full Document

This note was uploaded on 11/10/2011 for the course MATH 1310 taught by Professor Staff during the Fall '07 term at Texas State.

Ask a homework question - tutors are online