+0

The formula... I really need help on this one thing!

-5
270
3
+956

The formula...

Mar 20, 2019

#1
+24342
0

That is a compound interest formula     r is the ANNUAL rate    n is the number of compunding periods per year    and t is the number of years.

Mar 20, 2019
#2
+956
-7

Alright, then but what can this formula help to calculate? I'm still a bit confused...

GAMEMASTERX40  Mar 20, 2019
#3
+6192
+1

It's an effective annual rate.

Compounded quarterly we'd have an effective annual rate of

$$\left(1+\dfrac{0.05}{4}\right)^4 -1= 0.0509453 =5.09453\%$$

Compounded monthly

$$\left(1+\dfrac{0.05}{12}\right)^{12} -1=0.0511619 = 5.11619\%$$

Rom  Mar 20, 2019