• ## I can calculate the compound interest gained of a quantity.

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# What is Interest?

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### What lenders charge is called interest.

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# Formula for Calculating Interest

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## I = PRT I – Interest earned P – Principle (amount starting/amount invested) R- Rate (how much does it grow) T – Time (length invested)

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# Compound Interest

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### Compound interest will produce a larger return on a long-term investment compared to simple interest.

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### Notice how interest is charged on top of the interest. So over the course of 5 years, the difference is \$131.41.

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# Formula for Calculating Compound Interest

[/title][one_half last=”yes” spacing=”yes” center_content=”no” hide_on_mobile=”no” background_color=”” background_image=”” background_repeat=”no-repeat” background_position=”left top” border_position=”all” border_size=”0px” border_color=”” border_style=”” padding=”” margin_top=”” margin_bottom=”” animation_type=”” animation_direction=”” animation_speed=”0.1″ class=”” id=””][imageframe lightbox=”no” lightbox_image=”” style_type=”none” hover_type=”none” bordercolor=”” bordersize=”0px” borderradius=”0″ stylecolor=”” align=”none” link=”” linktarget=”_self” animation_type=”0″ animation_direction=”down” animation_speed=”0.1″ hide_on_mobile=”no” class=”” id=””] [/imageframe][fusion_text]

### FV – is the future value, what is the total amount you will owe or gain after all of the periods.

[/fusion_text][/one_half][/fullwidth][fullwidth background_color=”” background_image=”” background_parallax=”none” enable_mobile=”no” parallax_speed=”0.3″ background_repeat=”no-repeat” background_position=”left top” video_url=”” video_aspect_ratio=”16:9″ video_webm=”” video_mp4=”” video_ogv=”” video_preview_image=”” overlay_color=”” overlay_opacity=”0.5″ video_mute=”yes” video_loop=”yes” fade=”no” border_size=”0px” border_color=”” border_style=”” padding_top=”20″ padding_bottom=”20″ padding_left=”0″ padding_right=”0″ hundred_percent=”no” equal_height_columns=”no” hide_on_mobile=”no” menu_anchor=”” class=”” id=””][title size=”1″ content_align=”left” style_type=”none” sep_color=”” margin_top=”” margin_bottom=”” class=”” id=””]Formula for Calculating Compound Interest (Bi-annually/Quarterly/Monthly)[/title][one_half last=”yes” spacing=”yes” center_content=”no” hide_on_mobile=”no” background_color=”” background_image=”” background_repeat=”no-repeat” background_position=”left top” border_position=”all” border_size=”0px” border_color=”” border_style=”” padding=”” margin_top=”” margin_bottom=”” animation_type=”” animation_direction=”” animation_speed=”0.1″ class=”” id=””][imageframe lightbox=”no” lightbox_image=”” style_type=”none” hover_type=”none” bordercolor=”” bordersize=”0px” borderradius=”0″ stylecolor=”” align=”none” link=”” linktarget=”_self” animation_type=”0″ animation_direction=”down” animation_speed=”0.1″ hide_on_mobile=”no” class=”” id=””] [/imageframe][fusion_text]

### One common misconception is converting the rate of interest into rate percentage per period. For example, 5% p.a. compounded quarterly means it is 1.25% per period.

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