Compound Interest & Growth
Use this formula to calculate compound growth over time:
\(A = P \left(1 + \dfrac{r}{100}\right)^n\)
Where \(P\) is the initial amount, \(r\)% is the percentage rate, \(n\) is the number of time periods, and \(A\) is the final amount.
Example
Example: Invest $1000 at 5% for 3 years: \(A = 1000(1 + 0.05)^3 = 1000(1.157625) = $1157.63\)
Practice
You invest $500 at an interest rate of 4% per year, compounded annually for 2 years. What is the final amount?
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