How to calculate the interest rate for compound interest:
Step 1: Locate the following amounts: the final or closing balance of the account
: the starting balance
: the length of time the account is being held
: how many times the interest will be calculated
Step 2: write down the formula for compound interest
𝑖 𝑛 ×𝑡
𝐴 = 𝑃(1 + )
𝑛
Where - n is time ( years or months) and t is number of times interest ( monthly or
annually or quartle) is calculated.
- A is the final amount
- P is the principal or starting amount
- i is the interest rate as a % or over 100
Step 3: substitute the values in step one into the formula ( for this example I have used
Question 3 see below:
Step 1: Locate the following amounts: the final or closing balance of the account
: the starting balance
: the length of time the account is being held
: how many times the interest will be calculated
Step 2: write down the formula for compound interest
𝑖 𝑛 ×𝑡
𝐴 = 𝑃(1 + )
𝑛
Where - n is time ( years or months) and t is number of times interest ( monthly or
annually or quartle) is calculated.
- A is the final amount
- P is the principal or starting amount
- i is the interest rate as a % or over 100
Step 3: substitute the values in step one into the formula ( for this example I have used
Question 3 see below:
