## The Compound Interest Equation. P = C (1 + r/n) nt. where. P = future value. C = initial deposit r = interest rate (expressed as a fraction: eg. 0.06) n = # of times

This video shows how to derive the effective interest rate formula for compounded and This is the third and final form of a linear equation we will cover. At first  Your estimated annual interest rate. Interest rate variance range. Range of interest rates (above and below the rate set above) that you desire to see results for. Interest and compound interest are central in Finance: Firms borrow funds and use Formulas For Calculating Effective Intrest Rate The Borrowers, Calculator, Formulas Accounting Classes, Cost Accounting, Restaurant Design, Maths. When you know the principal amount, the rate, and the time, the amount of interest can be calculated by using the formula: I = Prt. For the above calculation, you have $4,500.00 to invest (or borrow) with a rate of 9.5 percent for a six-year period of time. The larger the interest rate and the longer the time period, the more expensive the loan. Also note that you could calculate this by first finding the interest, I = Prt = 10000 (0.075 (8)) =$6000, and adding it to the principal of $10000. The final answer is the same using either method. That is how simple interest works pay the same amount of interest every year. Example: Alex borrows$1,000 for 5 Years, at 10% simple interest: • Interest = $1,000 × 10% x 5 Years =$500 The simple interest formula allows us to calculate I, which is the interest earned or charged on a loan. According to this formula, the amount of interest is given by I = Prt, where P is the

Simple Interest Calculator. Simple interest is money you can earn by initially investing some money (the principal). A percentage (the interest) of the principal is added to the principal, making your initial investment grow!