Math Is Fun Forum

yorkmanz

Member

Registered: 2019-01-12

Posts: 13

compound interest

hello

please i need help understanding both questions

use the compound interest formula a= p(1+i)^n to answer the following questions:

1:) what type of equation is present if n is constant equal to 1, rather than a variable?

2:) what type of equation is present if i, A, or P are constant rather than  variable?

thanks

Jai Ganesh

Administrator

Registered: 2005-06-28

Posts: 48,384

Re: compound interest

Hi,

The compound interest formula:

or

where A is the Amount, P is the Principal, r or i is rate of interest per period (e.g. per month, per quarter, per annum etc.).

1.) When i increases, and n also increases, A and P increase. When i decreases n also decreases, A and P decrease.

when i increases and n decreases, or vice versa, the change is caused dependent on the values.

2). Amount and Principal is dependent on i, as well as n.

---

It appears to me that if one wants to make progress in mathematics, one should study the masters and not the pupils. - Niels Henrik Abel.

Nothing is better than reading and gaining more and more knowledge - Stephen William Hawking.

yorkmanz

Member

Registered: 2019-01-12

Posts: 13

Re: compound interest

Hi,

The compound interest formula:

or

where A is the Amount, P is the Principal, r or i is rate of interest per period (e.g. per month, per quarter, per annum etc.).

1.) When i increases, and n also increases, A and P increase. When i decreases n also decreases, A and P decrease.

when i increases and n decreases, or vice versa, the change is caused dependent on the values.

2). Amount and Principal is dependent on i, as well as n.

thanks for replying...

for 1:) since n is constant i think its just  Simple interest and principle

if

n = 1

=A = P(1+i)^n =

=P(1+i)^1

= P(1+i)

now we know that i = r/n

since r n=1,

i = r = interest rate

then we have A = P + P*i

i think its just  Simple interest and principle and we have

now the This is  a linear equation.

for 2:) TRICKY

if  i is a constant, this is an exponential equation  `a=b^n` where `b=P(1+i)` , `b` a constant. if (In this case, P is a parameter)

and so on for a, b

please correct me if i am wrong

thanks

Jai Ganesh

Administrator

Registered: 2005-06-28

Posts: 48,384

Re: compound interest

Hi yorkmanz,

Your reply (both parts) is correct.

---

It appears to me that if one wants to make progress in mathematics, one should study the masters and not the pupils. - Niels Henrik Abel.

Nothing is better than reading and gaining more and more knowledge - Stephen William Hawking.