The Compound Interest Rule is a part of the VCE Further Maths topic Recursion and Financial Modelling. It is part of the subtopic Compound Interest Investments and Loans.
What is Compound Interest and Future Value?
Compound interest is essentially a way of calculating ‘interest on interest’. The compound interest formula is used to calculate the future value of the loan or investment. It accumulates interest by this formula. This post will look at:
- Compound interest and how it works
- Calculating future value and interest using the formula
- Practical examples involving rearranging the formula
- Examples where compound interest isn’t compounded annually.
How Does Compound Interest Work?
The following video introduces the concept.
How to Calculate Future Value and the Interest Earned
The following videos explain how to perform calculations using the formula.
Rearranging the Formula
This video explains how to find the investment amount needed to reach a goal.
Not Compounding Annually?
The following video explains how to solve problems that are not compounded annually.
Want to learn more? Check out more of our VCE Mathematics resources here!