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A collection of videos to help GCSE Maths students learn how to calculate compound interest.
Compound interest is a powerful financial concept where interest is calculated not only on the initial principal but also on the accumulated interest from previous periods. This means you earn “interest on interest,” leading to faster growth of your money over time.
The following diagram gives the Compound Interest Rate Formula where the interest is compounded once per year. Scroll down the page for more examples and solutions.
The formula for compound interest is:
A = P (1 + R/n)(nt)
Where:
A = the future value of the investment/loan, including interest
P = the principal investment amount (the initial deposit or loan amount)
R = the annual interest rate (as a decimal)
n = the number of times that interest is compounded per year
t = the number of years the money is invested or borrowed for
If the interest is compounded once a year (n = 1) then the formula simplifies to:
A = P (1 + R)(t)
Steps to Calculate Compound Interest
Compound interest
Examples:
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