[SOLVED] compound interest calculations.

**MathBlaster47** · February 15th 2010, 01:20 PM

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?

**mathemagister** · February 15th 2010, 01:44 PM

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.

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