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Math Help - [SOLVED] compound interest calculations.

  1. #1
    Member MathBlaster47's Avatar
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    [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?
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  2. #2
    Member mathemagister's Avatar
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    Quote Originally Posted by MathBlaster47 View Post
    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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