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For the formula A=A0(1+r/k)^(kt) does it only work if t is in years and k is how many times per year it is compounded?
No, I believe that r and k and t could be defined in terms of some different time interval, but I have only ever seen this formula used when the basic time interval is the year. The units of r are typically in terms of the interest in a year, k is usually the number of interest computing periods per year, and t is the number of years.Austin said:For the formula A=A0(1+r/k)^(kt) does it only work if t is in years and k is how many times per year it is compounded?
Austin said:For the formula A=A0(1+r/k)^(kt) does it only work if t is in years and k is how many times per year it is compounded?
The interest formula is a mathematical equation used to calculate the amount of interest earned or paid on a loan or investment. It takes into account the principal amount, interest rate, and time period to determine the total interest amount.
To calculate interest, you will need to know the principal amount, interest rate, and time period. The formula is: Interest = (Principal * Interest Rate * Time)/100. This will give you the total interest amount in dollars.
Simple interest is calculated only on the initial principal amount, whereas compound interest is calculated on both the initial principal and any accumulated interest. This means that compound interest will earn more over time compared to simple interest.
Yes, the interest formula can be used for any type of loan or investment as long as the interest rate is expressed as a percentage and the time period is in years. It is a universal formula that can be applied to different scenarios.
The longer the time period, the higher the interest amount will be. This is because the interest is calculated over a longer period of time, resulting in more interest earned. Additionally, for compound interest, the more frequent the compounding periods (e.g. monthly instead of yearly), the higher the interest amount will be.