Working Out Compound Interest  

Compound interest is when the interest from a loan is added to the initial amount causing ever higher levels of interest to be charged. The principles of compound interest can also be applied to savings

If the interest rate is 100r % per period. After 1 periods an original loan of A amounts to A(1+r)

After 2 periods the loan amounts to A(1+r) 2

After three periods the loan amounts to A (1+r) 3

After N periods the loan amounts to A (1+r) n

When n equals to the power of

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