What is Compound Interest?
Compound interest is calculated on the initial amount borrowed or invested plus any interest that is either charged or earned respectively. We use the compound interest formula to calculate the future value of the loan or investment. The following post will explain future value and compound interest in HSC Standard Math, specifically focusing on:
- Compound interest and how it works
- Calculating future value and interest earned using the Compound Interest Formula
- Practical examples involving rearranging the formula
- Examples where it is not compounded annually, e.g. fortnightly, monthly, quarterly compounds.
How does compound interest work?
The following video introduces compound interest.
How to calculate future value and the interest earned
The following videos explain how to calculate the future value and the interest earned using the compound interest formula
Practical example – rearrange the formula
The following video explains how to calculate how much you may need to invest to reach $x by rearranging the formula.
Examples where it is not compounded annually
The following video explains how to solve problems that are not compounded annually.