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What is the “n” value for interest compounded daily?
n = 365
(365 days in a year)
What is the “n” value for interest compounded annually?
n = 1
(As in 1 year)
What is the “n” value for interest compounded weekly?
n = 52
(52 weeks in a year)
What is the “n” value for interest compounded monthly?
n = 12
(12 months in a year)
What is the “n” value for interest compounded quarterly?
n = 4
(As in the “four quarters” in a year)
What is the “n” value for interest compounded semi-annually?
n = 2
(As in half a year)
What is an annuity?
A “financial contract” between a customer and insurance company (such as a bank offering an IRA plan)
*Payments are frequent & regularly spaced.
Key phrase: depositing money “at the end of every month”
What is simple interest?
The amount of income loaned only as a start-up or isolated singular amount
Ex.) taking out a loan to start a delivery service
What is compound interest?
The accumulation of funds over an extended period of time
How do you calculate the total amount of a mortgage payment?
Monthly payments (times) 12 (times) number of years
How do you calculate the total amount of interest paid over time?
Total amount of payments - amount of mortgage
