Interest periods and compounding

0.0(0)
Studied by 0 people
call kaiCall Kai
learnLearn
examPractice Test
spaced repetitionSpaced Repetition
heart puzzleMatch
flashcardsFlashcards
GameKnowt Play
Card Sorting

1/8

encourage image

There's no tags or description

Looks like no tags are added yet.

Last updated 2:04 PM on 5/20/26
Name
Mastery
Learn
Test
Matching
Spaced
Call with Kai

No analytics yet

Send a link to your students to track their progress

9 Terms

1
New cards

What is the compound growth formula used for?

To calculate the future value of money ( how much money will I have in the future after compound interest?)

2
New cards

What is the compounds growth formula?

S(t) = S(0) (1+r)^t

<p>S(t) = S(0) (1+r)^t</p>
3
New cards

What formula is used if interest is compounded multiple times per year?

S(t) = S(0) (1+r/n)^tn, where n stands for the amount of time that the interest is compounded

<p>S(t) = S(0) (1+r/n)^tn, where n stands for the amount of time that the interest is compounded</p>
4
New cards

What is the effective rate of interest used for?

It is used to find out the true yearly interest rate after compounding

5
New cards

What is the formula for the effective rate of interest

R = ((1+r/n)^n)-1

<p>R = ((1+r/n)^n)-1</p>
6
New cards

What is continuous compounding?

Continuous compounding means that money is CONSTANTLY being added to the account

7
New cards

What is the formula for calculating the sum of money after (t) time with continuous compounding?

S(t) = S(0)e^rt

<p>S(t) = S(0)e^rt</p>
8
New cards

Who is continuous compounding better for, the borrower or the lender?

The lender

9
New cards

What is the formula for the effective interest rate for continuous compounding?

(e^r)-1

<p>(e^r)-1</p>