Compound Interest

Learn about compound interest with CEMC courseware, click lesson 4

Calculations with Compound Interest

1. To calculate future value $FV$

$FV=PV\left(1+\dfrac{r}{n}\right)^{n\times t}$

2. To calculate present value $PV$ (or, ‘principle’)

$PV=FV\div\left(1+\dfrac{r}{n}\right)^{n\times t}$

3. To calculate Interest, $I$

$I=FV-PV$

4. To calculate rate of return, as a percentage

$RoR=\dfrac{FV-PV}{PV}\times 100$

Read each question carefully before typing in your answer. Use the ‘ans’ feature of your calculator, don’t round before your final answer.

Compound interest quiz (you may practice this any time. You will be set this task on quiz day).