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Unformatted text preview: c Kendra Kilmer November 8, 2011 Section 5.1 - Compound Interest Simple Interest Formulas If I denotes the interest on a principal P (in dollars) at an interest rate of r (as a decimal) per year for t years, then we have: Interest: Accumulated Amount: Example 1: Find the simple interest on a $2,000 investment made for 3 months at an interest rate of 6% per year. What is the accumulated amount? Example 2: An investment paying simple interest at the rate of 5% per year grew to $3,100 in 10 months. Find the principal. Example 3: Find the accumulated amount after 3 years if $3,500 is invested at 5% interest per year compounded annually. Example 4: Find the accumulated amount after 3 months if $1,000 is invested at an annual interest rate of 4 . 5% compounded monthly. 1 c Kendra Kilmer November 8, 2011 Compound Interest Formula where A = Accumualated amount at the end of the time period, P = Principal, r = Nominal interest rate per year as a decimal, m = Number of compounding periods per year, and...
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This note was uploaded on 03/27/2012 for the course MATH 141 taught by Professor Jillzarestky during the Fall '08 term at Texas A&M.
- Fall '08