3 5 compound interest formula
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3.5 Compound Interest Formula. Imagine you deposit $10,000 in a five-year cd . The account pays 5.2% interested compounded daily. How much will your $10,000 investment be worth by the end of the 5 years?. Compound Interest Formula. B = ending balance. p = principal. r = interest rate.

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3.5 Compound Interest Formula

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3 5 compound interest formula

3.5 Compound Interest Formula


3 5 compound interest formula

  • Imagine you deposit $10,000 in a five-year cd. The account pays 5.2% interested compounded daily. How much will your $10,000 investment be worth by the end of the 5 years?


Compound interest formula

Compound Interest Formula

B = ending balance

p = principal

r = interest rate

n = number of compounds per year

t = time (in years)


Number of compounds

Number of Compounds

  • Annually

    • n = 1

  • Semiannually

    • n = 2

  • Quarterly

    • n = 4

  • Daily

    • n = 365 (or 366 in a leap year)


  • 3 5 compound interest formula

    Marie deposits $1,650 for three years at 3% interest, compounded daily. What is her ending balance?

    p = $1,650

    r = 0.03

    n = 365

    t = 3


    3 5 compound interest formula

    Kate deposits $2,350 in an account that earns interest at a rate of 3.1%, compounded monthly. What is her ending balance after 5 years?

    p = $2,350

    r = 0.031

    n = 12

    t = 5


    3 5 compound interest formula1

    3.5 Compound Interest Formula


    Apr vs apy

    APR vs. APY

    • APR

      • Annual interest rate

    • APY

      • Actual rate you earn with compounding interest

      • To find APY:


    3 5 compound interest formula

    Sharon deposits $8,000 in a one year CD at 3.2% interest, compounded daily. What is Sharon’s APY?


    3 5 compound interest formula

    Barbara deposits $3,000 in a one year CD at 4.1% interest, compounded daily. What is her APY for the account?


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