interest earned = principal x [(1 + r)^n] - 1
in your case: P[(1.08^2) - 1]
= P[0.16640]
if P = 200, interest is: 200 * 0.1664 = 33.28
here:
200 (1+8÷100)^2=￡233.32
the 1 in the (1 + (8/100) accounts for the principal, it is the decimal form of 100%
FV = PV(1 + r)^n
interest only: PV * [((1 + r)^n) - 1]
￡4327.748382 would I round up or down? UP
to the nearest pound: 4328
rounding to two decimal places: 4327.75
round up when the next relevant digit is 5 or more, down when less than 5
Interest calculated on the initial principal and also on the accumulated interest of previous periods of a deposit or loan. Compound interest can be thought of as “interest on interest,” and will make a deposit or loan grow at a faster rate than simple interest, which is interest calculated only on the principal amount.
The compound interest formula calculates the amount of interest earned on an account or investment where the amount earned is reinvested.
C=P[(1+r)n-1
The total interest is the interest portion only. you do not add the principal (the original amount). If you are rounding up to the nearest 2 decimal points or to the nearest penny, .748382 is rounded up to become .75. If your answer is to be to the nearest pound, round it up to ￡4328.
When asked to find the total compound interest rate do you include the initial amount in your answer? Eg .. calculate the total interest earned on a deposit for two years when the annual interest rate was 8%.
200 (1+8÷100)^2=￡233.32
Now would I add the initial ￡200?
Also, what if the answer was ￡4327.748382 would I round up or down?
Im confused..
