# [SOLVED] compound interest calculations.

• Feb 15th 2010, 01:20 PM
MathBlaster47
[SOLVED] compound interest calculations.
I just want to make sure that I have my concept down properly.
The generic formula is $A=P(1+\frac{r}{n})^{nt}$ given: A=amount, P=principal, r=interest rate, n=times annually compounded and t=duration of time.

So for question:
If interest is compounded annually, how much is $1000 worth in 8 years at 8%? P=1000, r=.08, n=1, and t=8. therefore: $A=P(1+\frac{r}{n})^{nt}\rightarrow A=1000(1+\frac{.08}{1})^{8}\rightarrow A=1000(1.08)^8=1850.93$ Other than being a preposterous interest rate for a cash deposit, am I correctly working this problem? • Feb 15th 2010, 01:44 PM mathemagister Quote: Originally Posted by MathBlaster47 I just want to make sure that I have my concept down properly. The generic formula is $A=P(1+\frac{r}{n})^{nt}$ given: A=amount, P=principal, r=interest rate, n=times annually compounded and t=duration of time. So for question: If interest is compounded annually, how much is$1000 worth in 8 years at 8%?

P=1000, r=.08, n=1, and t=8.
therefore:
$A=P(1+\frac{r}{n})^{nt}\rightarrow A=1000(1+\frac{.08}{1})^{8}\rightarrow A=1000(1.08)^8=1850.93$

Other than being a preposterous interest rate for a cash deposit, am I correctly working this problem?

It looks like you did everything correctly. I checked using a completely different method so I can say that: yes, that is the correct answer.(Happy)