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Jasmine Gillie
Compounding interest
I made sense of compounding, continuous compounding,
and simple interest by breaking the equations down and
defining the variables. This way I could easily plug in
numbers and find the interests in different problems.
Simple interest A = Amount in account
formula P = Principal (amount initially
A = P + Prt deposited)
R = Rate written as a decimal
Compounding (annually)
interest formula E = Base
A = P (1 + nr ) nt T = Time the investment is made
for in years
Compounding N = Number of times the interest
continuously is compounded
formula
A = P e rt Annually N=1
Addition Rule
(x y) = am an = am+n
loga(x y) = loga(am+n)
loga(x y) = m + n
Meaning,
loga(x y) = logax + logay
Subtraction Rule
x am mn
y = an = a
loga yx = loga(amn)
loga yx = m n
Meaning,
loga yx = logax logay
Power Rule
xn = (am)n = amn
loga(x n) = loga(amn)
loga(x n) = m n
Meaning,
loga(x n) = n logax