Compound interest with annual contributions formula
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Calculating compound interest requires a formula: A = P (1 + r/n) (nt). Into that formula you put your principal amount, interest rate (as a decimal), the number of compounds and the amount of time you're investing or borrowing for. Once you've done that, the formula will give you a total that includes your principal and compounded interest.
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Answer:
A = P[1 + (r/n)]^(nt)
whereas,
A = final amount
P = initial principal balance
r = interest rate
n = number of times interest applied per time period
t = number of time periods elapsed
Explanation:
What is Compound Interest (CI) ?
Compound Interest is all about adding interest to principal amount of loan , deposit .
Simple Annual Interest Rate =>
It is the interest amount per period which gets multiplied by the number of periods per year.
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