You invest your $20000 savings in a term deposit for 3 years at 5.5% p.a. compounding monthly.
The compound interest formula is A=P(1+r/n)(to the power of)nt
Would it be -
P=20000
r=5.5
n=12 (months)
t=3 (years)
what could be the problem
plug in those value
A=20000(1+5.5/12)^3*12
A=20000(1+0.4583)^36
A=20000*(1.4583)^36
Puch ur calculator for (1.4583)^36
And multiply by 20000
and wuehi we are done!!!
The answer I got was un-reasonable
hmmm never mind u gave me a wrong formula
A=p(1+r%)^n
A=20000(1+5.5/100)^3
A=20000(1+0.055)^3
A=20000*(1.055)^3
now do what i told you
recall that
i=A-p
Nah we both got it wrong... The formula is still A=p(1+r/n)^nt
Except - The "r" is expressed as r/100 so I needed it to be .055/12
______________________________________
Found this from a compound interest calculator.
A = P(1 + r/n)nt
Where:
A = Accrued Amount (principal + interest)
P = Principal Amount
I = Interest Amount
R = Annual Nominal Interest Rate in percent
r = Annual Nominal Interest Rate as a decimal
r = R/100
t = Time Involved in years, 0.5 years is calculated as 6 months, etc.
n = number of compounding periods per unit t; at the END of each period