Sections:

# Compound Interest Word Problems

About:

Additional Resources:

In this lesson, we will learn about the compound interest formula and how to solve compound interest word problems. By utilizing the compound interest formula, we can determine the future value of an investment or loan when compounding interest is taken into account. The compound interest formula takes into consideration the principal amount, the interest rate, the frequency of compounding, and the duration of the investment or loan. The compound interest formula is given by:

A=P(1 + r/n)

The future value, denoted as A, represents the total amount that will be accumulated or repaid at the end of the specified time period. The present value, represented by P, indicates the initial amount of money invested or borrowed. The interest rate, denoted as r, expresses the annual interest rate as a decimal. The variable n, represents the number of compounding periods within a year, reflecting how often the interest is compounded. Lastly, the variable t signifies the duration of the investment or loan in years. By substituting the given values into the compound interest formula, we can determine the future value, which allows us to assess the growth or repayment potential of an investment or loan.

A=P(1 + r/n)

^{(tn)}The future value, denoted as A, represents the total amount that will be accumulated or repaid at the end of the specified time period. The present value, represented by P, indicates the initial amount of money invested or borrowed. The interest rate, denoted as r, expresses the annual interest rate as a decimal. The variable n, represents the number of compounding periods within a year, reflecting how often the interest is compounded. Lastly, the variable t signifies the duration of the investment or loan in years. By substituting the given values into the compound interest formula, we can determine the future value, which allows us to assess the growth or repayment potential of an investment or loan.

Compound Interest Word Problems:

Videos:

YouTube - Video YouTube - Video Text Lessons:

CK-12 - Text Lesson Purple Math - Text Lesson Worksheets:

Khan Academy - Practice + Show More +