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Mathematics-Online lexicon:

Compound Interest

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With an interest rate of $ p$ , a seed capital $ x$ results after $ n$ out-/incoming payments of $ r$ ($ r<0$ or . $ r>0$ respectively) in the final sum of

$\displaystyle y = (1+p)^nx + \frac{(1+p)^n - 1}{p} r\, . $

Here $ p=1$ corresponds to an interest rate of $ 100\%$ , speaking in annual rates.

With monthly interest calculation at an interest rate $ p_m$ , the annual percentage rate $ p_j$ calculates as

$\displaystyle p_j=(1+p_m)^{12}-1 \geq 12p_m\,. $

(Authors: Höllig/Hörner/Abele)

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  automatically generated 4/ 8/2008