The Formula for Finding Compound Interest Is $A = P \left( 1 + \frac { r } { n } \right) ^ { n t }$

question 44

Short Answer

The formula for finding compound interest is $A = P \left( 1 + \frac { r } { n } \right) ^ { n t }$ where $\mathrm { A }$ is the accumulated amount, $P$ is the principal invested, $r$ is the rate of interest, $t$ is the time in years, and $n$ is the number of compounds each year. Find the accumulated amount if the principal invested is $\$ 5,000$ , the rate is $8 \%$ , the compounds each year is 4 (quarterly)! and the number of years is 5 .

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Definitions:

Debtor

An individual or entity that owes money or has a financial obligation to another party, known as the creditor.

Mortgage

A written instrument that gives a creditor (the mortgagee) an interest in, or lien on, the debtor’s (mortgagor’s) real property as security for a debt. If the debt is not paid, the property can be sold by the creditor and the proceeds used to pay the debt.

Creditor

An individual, institution, or entity that lends money or extends credit, expecting to be repaid.

Lien

A claim against specific property to satisfy a debt.