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CPM “ Compound Interest”

CPM “ Compound Interest”. The Compound Interest Formula can be used to determine how interest effects the amount paid on the principle that is compounded at different intervals of the year. The compound interest formula is:. A=____________ P=___________ r =_______ n =_________

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CPM “ Compound Interest”

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  1. CPM“Compound Interest”

  2. The Compound Interest Formula can be used to determine how interest effects the amount paid on the principle that is compounded at different intervals of the year. The compound interest formula is:

  3. A=____________ P=___________ r=_______ n=_________ t=____________ Amount Owed/Earned Principle Rate # of times compounded/year Time in years

  4. nrepresents how many times the principle is compounded in a year. Yearly___ Bi-yearly___ Quarterly___ Monthly___ Weekly___ Daily____ 1 2 4 12 52 365

  5. Example: Alexander The Great XXV deposited $26,450 into a savings account in 1921 at a rate of 3.25% that was compounded monthly. How much would he have in 1974? ? A=_____ P=___________ r=_______ n=_________ t=____________ $26,450 0.0325 12 53 Plug it in exactly like this in your calculator Round to the nearest penny That’s $121,286.13 over 53 years gained from interest

  6. M.C. Hammer went to the bank to take out a loan after all of his investments force him to go broke. He was asking for a loan of a half a million dollars to produce a new record. The bank agreed to loan him the money at an extremely high rate of 13% for 10 years. The only perk Mr. M.C. Hammer was allowed to decide was how it was compounded. Find out what the overall amount would be if it was compounded every way. Yearly: Bi-yearly: Quarterly: Monthly: Weekly: Daily: The more times it is compounded a year, the interest will be paid

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