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Compound Interest Definitions
Instructions: Familiarize yourself with the following
terms. Be certain that you know the definition of each
term and where it corresponds in the Compound Interest
Formula.
A=P(1+i)n
A is the acculmulated amount, the
amount of money earned by interest over time.
The accumulated value is the money at the end of the
elapsed time. It is
the money earned after receiving interest for a certain period.
P = the principle, the original
amount of money.
This is the invested amount of money.
i = r/m is the rate of
simple interest rate per conversion
period.
This is the true interest.
Every time the money is compounded, it increases
by this percentage.
r =
the rate of simple interest per year.
m = the number of conversion periods
per year.
n = mt is the total number
of times that the amount of money
is compounded.
t = term (number of years)
m = the number of conversion periods
per year.
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Compound Interest Introduction
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