How do I figure out compound interest in an equation? Do I still do I=PRT and multiply the numbers together like simple interest?
+118690 No the formula for compound interest is
\(FV=PV(1+r)^n\)
where
FV=future value
PV = present value (at the start)
r is the rate per compouning period expressed as a decimal
n is the number of compouning perods.
so
If you inbest $250 for 3 years at 6% per annum compounded monthly then
n = 3*12 = 36 (months)
r= 0.06/12 = 0.005 ( this is the rate per month)
so
FV(in three years) = \(250(1+0.005)^{36} = 250*1.005^{36} \)
250*1.005^36 = $299.1701
