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Compound interest investment math. Going backwards to work out the present. Interest rate estimated interest rate your estimated annual interest rate. Investments like this grow quickly. Initial investment initial investment amount of money that you have available to invest initially.
So adding 10 interest is the same as multiplying by 1 10 now here is the magic. Remember it because it is very useful. The compound interest formula is used when an investment earns interest on the principal and the previously earned interest. A the future value of the investment loan including interest p the principal investment amount the initial deposit or loan amount r the annual interest rate decimal n the number of times that interest is compounded per unit t t the time the money is invested or borrowed for.
After one year you will have 100 10 110 and after two years you will have 110 10 121. We could do the. How quickly depends on the rate and the number of compounding periods. Suppose you give 100 to a bank which pays you 10 compound interest at the end of every year.
Interest rate variance range range of.
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