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

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The formula...

Mar 20, 2019

#1
+19912
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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
+49
-6

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

GAMEMASTERX40  Mar 20, 2019
#3
+6046
+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