precalc finanical applications of exponential functions

periodic compounding interest

interest that is compounded over a certain period of time

continuous compounding interest

interest that is compounded constantly

future value of annuity

we use this to calculate how much an investment will be worth in the future

present value of annuity

we use this to calculate how much we’d have to invest now in order to earn/pay off a specific amount in the future (loan)

A

the amount of money after t years

P

original amount of money

r

interest rate

n

number of times the interest is compounded per year

FV

future value

PV

present value

R

payment

t

amount of time