Compound Interest

compound interest formula  Click the tabs to calculate the different parameters of the simple interest formula In real life, most interest calculations involve compound Interest To Apply the Annual Compound Interest Formula Simple interest only earns a fixed amount of interest based on the original principal amount On the other hand,

Step 1: After the first year, the interest in Abena's CD is computed using the interest formula I = P × r × t I = P × r × t The principal is P However, it is much more useful in most cases to use the simplified formula B=P because it leads to the formula for a much more common

When Rates are Different for Different Years Let's consider you have borrowed money from the bank, but the rate of interest changes every year  The interest on the original balance alone would be called simple interest The additional earnings plus simple interest would equal the total amount earned